ShareChat cuts 200 jobs in third round of layoffs this year
Synopsis
Headcount reduction linked to company plan to secure funding based on financial goals
By Supriya Roy, ETtech
Last Updated:
Vernacular social media platform ShareChat on Wednesday said it laid off 15% of its staff in a bid to streamline costs and achieve profitability within the next 4-6 quarters.
These cuts are linked to the company’s broader fundraising plans where it needs to meet certain financial targets to be able to secure new financing, people aware of the discussions said.
ShareChat, which is also backed by Tiger Global and X (formerly Twitter), is looking to close financing of at least $50 million with a steep cut in valuation.
“Internally, the stakeholders agree that in current circumstances, valuation has to be adjusted. It is likely to be closer to $1 billion. The talks are underway for funding at $1.0-1.5 billion valuation,” a person aware of the matter said.
The company last raised equity funding at a valuation of nearly $5 billion.
ShareChat has also considered raising funds through convertible notes, or securities which would get converted into equity at a later stage.
“In alignment with our strategic vision, the company undertook a comprehensive restructuring effort to streamline operations, enhance productivity and position the company for sustainable growth,” a ShareChat spokesperson told ET in response to a query on the layoffs.
ShareChat did not respond to questions on funding.
TechCrunch was the first to report about a 15-20% layoff at ShareChat, earlier in the day.
For the financial year ended March 2023, Mohalla Tech — the parent of ShareChat — had posted a loss of Rs 4,064 crore, 38% wider than the previous year, driven by non-cash items such as increased financing costs and impairment of investments in subsidiaries.
Revenue for the year ended March 31 rose 62% to Rs 540 crore. Chief financial officer Manohar Charan told ET in November that the company was looking to cut its loss to below Rs 1,000 crore in the ongoing financial year.
Ongoing layoffs
The layoffs are still underway, and the final number may change eventually.
In December 2022, the company had laid off 100 employees and followed up with its biggest cut of 500-600 roles in January.
Founder and chief executive Ankush Sachdeva had attributed the developments at the time to how the company had overestimated the market’s growth during the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze that followed in an internal memo.
Even as advertising is the key source of revenue for the company, it has been pushing in-app transactions to build it as a revenue vertical. Key platforms of the startup include ShareChat and Moj.
“We have reduced our server costs significantly, which is one of the biggest cost centres for a social media platform,” Charan had told ET. “We have taken corrective steps throughout the year, which have led to ShareChat — as a standalone business — become contribution margin positive.”
ADVERTISEMENT
The 15% headcount translates to about 200 employees at the company backed by the likes of Google and Temasek Holdings. This is the third round of layoff in a little over a year at ShareChat, which has been trying to reduce operating costs.Elevate Your Tech Prowess with High-Value Skill Courses
| Offering College | Course | Website |
|---|---|---|
| Indian School of Business | ISB Product Management | Visit |
| MIT xPRO | MIT Technology Leadership and Innovation | Visit |
| IIT Delhi | Certificate Programme in Data Science & Machine Learning | Visit |
ShareChat, which is also backed by Tiger Global and X (formerly Twitter), is looking to close financing of at least $50 million with a steep cut in valuation.
“Internally, the stakeholders agree that in current circumstances, valuation has to be adjusted. It is likely to be closer to $1 billion. The talks are underway for funding at $1.0-1.5 billion valuation,” a person aware of the matter said.
The company last raised equity funding at a valuation of nearly $5 billion.
ADVERTISEMENT
ShareChat has also considered raising funds through convertible notes, or securities which would get converted into equity at a later stage.
“In alignment with our strategic vision, the company undertook a comprehensive restructuring effort to streamline operations, enhance productivity and position the company for sustainable growth,” a ShareChat spokesperson told ET in response to a query on the layoffs.
ADVERTISEMENT
ShareChat did not respond to questions on funding.
TechCrunch was the first to report about a 15-20% layoff at ShareChat, earlier in the day.
ADVERTISEMENT
For the financial year ended March 2023, Mohalla Tech — the parent of ShareChat — had posted a loss of Rs 4,064 crore, 38% wider than the previous year, driven by non-cash items such as increased financing costs and impairment of investments in subsidiaries.
Revenue for the year ended March 31 rose 62% to Rs 540 crore. Chief financial officer Manohar Charan told ET in November that the company was looking to cut its loss to below Rs 1,000 crore in the ongoing financial year.
ADVERTISEMENT
Ongoing layoffs
The layoffs are still underway, and the final number may change eventually.
In December 2022, the company had laid off 100 employees and followed up with its biggest cut of 500-600 roles in January.
Founder and chief executive Ankush Sachdeva had attributed the developments at the time to how the company had overestimated the market’s growth during the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze that followed in an internal memo.
Even as advertising is the key source of revenue for the company, it has been pushing in-app transactions to build it as a revenue vertical. Key platforms of the startup include ShareChat and Moj.
“We have reduced our server costs significantly, which is one of the biggest cost centres for a social media platform,” Charan had told ET. “We have taken corrective steps throughout the year, which have led to ShareChat — as a standalone business — become contribution margin positive.”
