Loss-making social media startup Sharechat lays off 200 employees: Report

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.

This isn't the first time ShareChat has announced layoffs. Previously, the company laid off 600 employees and ceased operations of its gaming platform, Jeet11, resulting in 100 job losses.

"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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