Social media startup ShareChat’s valuation has cratered under $2 billion from almost $5 billion in a brand new funding spherical, a supply conversant in the scenario instructed TechCrunch, marking a steep decline for the nine-year-old Indian startup that boasts over 400 million customers within the South Asian market.

The Bengaluru-based startup, which operates a preferred social community supporting a dozen Indian languages in addition to a short-form video app, introduced on Monday that it had raised $49 million in a convertible spherical. It didn’t disclose the valuation at which the funds had been raised however strongly denied that its new valuation was under $2 billion, asserting there was “no valuation” connected to the spherical.

Present traders together with Lightspeed, Temasek, Alkeon Capital, Moore Strategic Ventures and HarbourVest have invested within the new spherical, the startup stated. Their debt will convert to fairness at a valuation under $2 billion within the subsequent spherical, in line with a supply with direct information of the phrases. The supply requested anonymity to talk candidly. TechCrunch reported in December that ShareChat was going through a steep valuation minimize.

ShareChat additionally counts Google, X, Snap, Tiger International and Tencent amongst its backers. It has raised about $1.75 billion to this point. ShareChat was valued at $4.9 billion in a funding spherical it raised in mid-2022.

The markdown comes regardless of ShareChat experiencing a remarkably optimistic yr, aggressively chopping bills whereas managing to double its income. “When the market turned, we needed to mood [acquisitions and creator payments] and transfer in direction of extra worthwhile development,” Ankush Sachdeva, ShareChat’s co-founder and chief government, instructed TechCrunch in an interview.

ShareChat has not spent cash buying customers prior to now yr, with Sachdeva crediting enhancements to the startup’s content material advice engine for driving person retention and engagement. The corporate has additionally invested closely in AI expertise, notably for senior roles in its London-based staff. ShareChat additionally unveiled that it has doubled the ESOP grant for every worker within the agency as a part of a particular bonus grant.

It has additionally been capable of pare down its single-largest expense, the associated fee to serve content material, he stated. “Whenever you fetch content material on one in every of our apps, we do lots of computation to seek out the ten finest content material. To serve and devour that, there’s one other supply value. Optimizing this has helped us decrease our burn,” he stated.

ShareChat has diminished its month-to-month money burn by 90% over the previous two years whereas doubling income, attracting giant FMCG corporations and gaming firms as advertisers.

The startup additionally stays dedicated to the short-video market in India, regardless of robust competitors from YouTube and Instagram following the nation’s ban on TikTok in 2020.

“By way of site visitors, ours is decrease than these of Instagram and YouTube, however we’re the most important when it comes to a standalone app,” stated Sachdeva. He believes ShareChat’s distinctive give attention to live-streaming as a vacation spot for leisure and creator-user connections will differentiate it from American rivals. The startup acquired native rival MX TakaTak in a deal valued over $700 million in 2022.