Deal focus: ShareChat makes hay in TikTok’s absence

When Lightspeed India Partners led a $4 million Series A for Indian social networking platform ShareChat in 2017, the valuation was only $15 million. The start-up was worth a still fairly modest $700 million on raising its pre-Series E last September, but this became $2.1 billion for the Series E proper in April and then $3 billion for the Series F, which closed last week.

The Series F, which saw Temasek Holdings, Moore Strategic Ventures, and Mirae Asset Global Investments lead a $145 million commitment, takes ShareChat’s total funding since inception to more than $900 million.

Much of the recent traction has come following the launch of short video platform Moj. It had helped drive ShareChat's monthly active users (MAUs) to 120 million as of April. CEO Ankush Sachdevea has set a target of one billion MAUs, though without specifying a timeframe.

Coding for Moj took 30 hours and the service launched on the same day in June 2020 that Chinese short video giant TikTok was banned in India, alongside 223 other Chinese apps. At the time, TikTok had more than 200 million users in the country. Several domestic platforms pushed aggressively into the white space, with Moj prominent among them.

The platform’s success is no fluke, observes Dev Khare, a partner at Lightspeed India. He points to the strong artificial intelligence (AI) algorithm that underpins both Moj and ShareChat. The company has bolstered its capabilities in this area, notably through the recruitment of Gaurav Mishra, who previously spearheaded AI, data, and marketplace platform initiatives at Uber.

“They had been developing the AI algorithm and accumulating AI talent for six years prior to the launch of Moj. They had the longest run time and the most data in the market to work with. Their algorithm has essentially been learning for six years, which makes it the best algorithm,” says Khare.

When a user registers with the app for the first time, the algorithm leverages what information is available to send one or two pieces of content that are likely to be of interest. “You have to predict what that user would like from billions of pieces of content, without knowing much about the user. And then it learns quickly and provides very personalized content. The same engine drives very targeted advertisements,” explains Khare.

Moj not only leverages ShareChat’s technology but also benefits from the company’s content ecosystem. ShareChat is the largest regional social media service in India. It was the product of an experiment whereby the founders created 10 WhatsApp groups on cricketer Sachin Tendulkar with 100 members each, and then looked on as the content arrived – all in the users’ vernacular languages. ShareChat’s networking services are available in 15 local languages.

This content feeds into Moj, which means the platform features far more local output than TikTok ever did, Khare observes. He also contends that ShareChat’s success is built on access to capital, which in turn relies on investors having conviction in the product and its competitive sustainability. For ShareChat, the point of differentiation is that emphasis on local language and culture.

"We saw that 99% of the online media landscape in India was in English, yet 90% of Indians do not speak English, so there was a clear mismatch. We thought that, fundamentally, there needs to be an Indian language internet," says Khare, explaining why Lightspeed started looking for local social networking platforms in 2015 and eventually backed ShareChat. It has re-upped multiple times since the Series A.

One of the venture capital firm’s key contributions was to introduce ShareChat’s founders to their counterparts at Snap – a meeting made possible by US-based Lightspeed Venture Partners being a seed investor in Snap. This led to a long-term collaboration. Some of Snap’s user tools were introduced on ShareChat and then Moj, giving the platform another leg up on TikTok.

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• Topics
• South Asia
• Technology
• Media
• Expansion
• India
• Lightspeed Venture Partners
• Temasek Holdings
• Mirae Asset Private Equity
• TMT
• Growth capital