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Social networking platform ShareChat gets $18.2 mn in Xiaomi-led Series B round

Vernacular social networking platform ShareChat has raised Rs 116.31 crore ($18.2 million) in a Series B funding round led by Chinese smartphone manufacturer Xiaomi.

According to Ministry of Corporate Affairs (MCA) filings, Xiaomi put in Rs 36.84 crore ($5.76 million). Shunwei Capital, the venture fund started by Xiaomi founder Lei Jun, invested Rs 18.01 crore ($2.82 million).

The rest came from existing investors SAIF Partners ($4.29 million), Lightspeed Partners ($2.94 million), India Quotient ($2.06 million) and Venture Highway ($264,600).

Sharechat, operated by Bengaluru-headquartered Mohalla Tech Pvt. Ltd, was valued at Rs 431 crore ($67 million) post-money, according to VCCircle estimates.

Going by the company’s past filings, ShareChat's pre-money valuation rose 227% or over three times to Rs 315 crore over the post money valuation of around Rs 96 crore in the previous round.

E-mail queries sent to ShareChat co-founders Farid Ahsan, Bhanu Pratap Singh and Ankush Sachdeva - all IIT-Kanpur alumni - did not elicit a response at the time of publishing this report. Shunwei Capital and SAIF Partners did not respond either, while a Xiaomi spokesperson declined to comment.

Last September, The Times of India had reported that Xiaomi and Shunwei Capital were in the advanced stages of an investment deal with ShareChat. Citing unnamed sources, the report had pegged the valuation of the three-year-old social networking platform at Rs 400 crore-Rs 500 crore.

In November 2016, ShareChat had raised $4 million (Rs 27.5 crore) in a Series A round led by Lightspeed India Partners. Other participants included existing investors SAIF Partners and India Quotient, as well as Delhi-headquartered early-stage venture capital firm Venture Highway.

In October 2015, it had raised $1.35 million from SAIF Partners and India Quotient. ShareChat was also one among several startups selected by Google for its accelerator programme. As part of the programme, the firm had received $50,000 in equity-free seed funding.

ShareChat

Founded in 2015, ShareChat allows users to create, discover and share content such as videos, jokes, songs and images.

The Android app, which has more than 10 million downloads on the Google Play Store, is available in multiple Indian languages - Hindi, Telugu, Marathi, Gujarati, Punjabi, Malayalam, Bengali, Tamil, Kannada and Odia.

ShareChat had recorded a 14-fold rise in gross revenues at Rs 78.40 lakh in the financial year 2016-17, up from Rs 5.56 lakh the previous year.

The company's financial statements showed zero operational revenues for the last two financial years. The entire revenue generated by the company was from Other Income, which included profit on sale from investments (Rs 41.69 lakh),  interest income (Rs 2.57 lakh) and participation income (Rs 34.12 lakh).

Gross expenditure rose four-fold to Rs 10.38 crore in 2016-17 from Rs 2.62 crore the previous year, mainly because employee-related expenses and administrative overheads nearly tripled.

Consequently, net losses also rose nearly four-fold to Rs 9.59 crore in 2016-17 from Rs 2.56 crore the previous year.

Fresh investors 

Xiaomi Inc made its first publicly-disclosed investment in India in April 2016. It had led a $25-million round in online entertainment company Hungama Digital Media Entertainment as part of its strategy to introduce local content on its smartphones.

Last April, Shunwei Capital and Accel Partners invested Rs 25.5 crore (around $3.8 million) as part of a Series A round in gaming startup Mech Mocha. The Chinese VC firm had closed its third fund in July 2015 with a capital commitment of $1 billion.

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