ShareChat dialed China's Tencent to raise $ 200 million in funding

ShareChat dialed China's Tencent to raise $ 200 million in funding

Twitter-backed homegrown social media platform ShareChat is in talks with Chinese technology giant Tencent to raise $200 million through optionally convertible debentures, sources told ET.

The funding is likely to be routed via a Europe-based entity to avoid the China investment tag, in light of tightened foreign direct investment norms which the government put in place last year following an escalating border conflict with the northern neighbour.

India said last year that any FDI from countries sharing a land border with it, including China, would need prior approval.

The significant financial investment could at a later stage entail a change in management control of ShareChat – since optionally convertible debentures are debt instruments that can be converted to equity after a certain period -- and may even pose a risk related to local data storage and processing, the sources said, without providing further details.

An Indian company can get the benefit of banning TikTok and Helo app in India. Twitter is now preparing to buy this Indian company. In the coming time, this homegrown company can be rich.

According to the report of IANS, Twitter seems serious about increasing its reach in the Indian market. Microblogging Platfrom is reportedly considering buying the indigenous social networking platform Sharechat. According to a report by TechCrunch, Twitter's interest in buying Sharechat is because Twitter's ambition to emerge as a global competitor to 'TickTalk' through the MoJ Short Video Platform.

The report says that Twitter has offered $ 1.1 billion in addition to a commitment of additional investment of $ 90 million for the acquisition. In the report, the possibility of this acquisition has been raised, because so far no official confirmation has been made by Twitter or Sharechat about the negotiations for the deal.

Sharechat-owned Moj already claims to have more than 80 million monthly active users. India saw the rise of Moj and other domestic short video platforms after the ban on Chinese app TicketTalk in June 2020 for security reasons.

In June last year, the government moved to ban 59 Chinese apps, including popular ByteDance-owned short-videos platform TikTok, amid the intensifying border standoff with China.

The move helped a host of Indian copycat short-video apps, including ShareChat’s Moj, to gain traction and attract investor interest.

ShareChat, which raised $100 million from microblogging site Twitter and others in August 2019, pulled in $40 million in September last year from existing investors Twit ..

Future-Ready Approach

This was primarily aimed at driving growth of its Moj platform, which the company said last month had crossed 100 million downloads on the Google Play Store.

In November, ET reported that search giant Google was in preliminary talks to acquire the Bengaluru-based regional language platform at a potential valuation of a little over $1 billion.

The company – which also counts TrustBridge Partners, Shunwei Capital, Elevation Capital (formerly SAIF Capital) among its investors -- appointed Gaurav Mishra, a former product leader at Uber, the same month to build both the ShareChat and Moj platforms with a future-ready approach. ShareChat said then that it would also set up ShareChat Labs, a Centre of Excellence in Palo Alto, California, its first establishment outside the country.

The government has been firm about not revoking the ban on Chinese apps citing national security concerns.

Almost seven months after it issued show cause notices to 59 Chinese apps including TikTok, Helo, WeChat and Alibaba’s UC Browser, it moved to permanently block them in January after clarifications sought from these entities following the ban were found to be inadequate.

In September last year, the government banned a further 118 apps, while it blocked 43 new Chinese mobile apps in November, including shopping website AliExpress.