Over the past few months, the Indian social media platform ShareChat, which was once a rising star in the Indian startup ecosystem, has been facing a significant downturn.
The Bengaluru-based company, valued at $5 billion at its peak, has seen its valuation plummet to $1.5 billion. The decline has shifted the company's leadership's focus to a series of cost-cutting measures, including substantial layoffs.
A new round of layoffs at Sharechat
ShareChat has laid off 200 employees, approximately 15% of its workforce, as part of a "strategic restructuring" move. According to the company, the move is aimed at streamlining the company's cost base and achieving profitability within the next four to six quarters.
"ShareChat today undertook a strategic restructuring as part of its annual planning for the year 2024. The decision reflects the company's commitment to streamlining its cost base and achieving profitability within the next four-six quarters," the company said.
The ongoing financial struggles
ShareChat financial struggles are evident in its significant valuation drop from $4.9 billion to $1.5 billion, according to an ET report. Despite a 62% increase in revenue to Rs 540 crore in FY23, ShareChat's parent net losses surged by 38% to Rs 4,064 crore.
The company blames these losses on rising server rents, financing costs, and foreign exchange losses, among other factors.
The departure of co-founders
The departure of co-founders Bhanu Pratap Singh and Farid Ahsan in January 2023 has also impacted investor confidence. The duo has since raised $3 million for a new venture in the industrial robotics space, General Autonomy.
It's worth mentioning that ShareChat's struggle to raise funds and the leadership changes have somewhat contributed to the company's current challenges.
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