Synopsis The Bengaluru-based firm, backed by Twitter and Snap Inc, has cut its cash burn down by a third compared to the same time last year, ShareChat founder and CEO Ankush Sachdeva told ET. ETtech ShareChat founder and CEO Ankush Sachdeva (Illustration: Rahul Awasthi) Local language social media startup ShareChat , which undertook one of the largest layoffs among Indian startups last month , will prioritise scaling up revenue and treat each business on its short-term ability to generate cash flows, its founder told ET. The Bengaluru-based firm, backed by Twitter and Snap Inc, has cut its cash burn down by a third compared to the same time last year, ShareChat founder and CEO Ankush Sachdeva told ET, as investors seek tighter financials before writing their next cheques amid a tough funding environment for startups. ShareChat, which was last valued at $5 billion, is preparing to open up its social media platform as well as short-video app Moj to political advertising ahead of the general elections next year as well as state elections later in 2023. This will bring in additional revenue for parent firm Mohalla Tech , he said. Mohalla Tech had operating revenue of around Rs 350 crore and losses of Rs 2,988 crore in FY22. “Our monthly burn today is a third of what it was the same time last year and our revenue run-rate would be double,” Sachdeva said in an exclusive interaction. Sources said ShareChat’s burn is still in the range of $6-9 million per month, though Sachdeva did not comment on the actual number. The two co-founders of the firm-- Farid Ahsan and Bhanu Pratap Singh-- stepped away from day-to-day roles recently. ShareChat earlier this month started scaling down on its live commerce business. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories “One thing we have started focusing way more on is how to get to cash flow positive and be profitable–as a company. We've been in a phase where we've been focused just on growing our DAUs (daily active users) and MAUs (monthly active users),” Sachdeva said. “Three years ago, we started monetisation and now we are focused on increasing ARPU (average revenue per user) in both ShareChat and Moj,” and to make each of them profitable, he said. Moj was launched after the government banned Chinese short video app TikTok in 2020. According to Sachdeva, Mohalla Tech’s biggest strength is its recommendation engine, which shows the right content to users. “That’s the core IP of our platform. We have put a large bet on AI piece, and we see quarter on quarter incremental increase on times spent by DAUs. All the core metrics that you would look at in a social media company, a large part of that is driven by AI,” he said. Mohalla Tech has around 400 million MAU, he said. “Organically, MAU has grown 50% y-o-y. ” ShareChat is aiming to achieve profitability by May 2024, while Moj will achieve profitability by February 2025, Sachdeva said. “We do measure them (ShareChat and Moj) on their own merit – as products. What is the cumulative cash flow we will get from each business in the next five years,” he said, indicating every product has to justify the investments it will require at a standalone level. However, there are synergies across both platforms. “For example, offering ShareChat standalone to an advertiser and doing that along with Moj makes a big difference. ” he added. The change in focus at ShareChat comes after Sachedva last month told employees in an internal memo that the company had overestimated the market’s growth during the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze that followed. He told ET that market dynamics in 2021 forced the company to go for a high-growth strategy amid record capital being available for startups. Its $255 million fundraise in June 2022 from Google and others came before the funding crunch and slowdown in the new economy sector. “We took decisions when there was growth at any cost and there was capital available for startups chasing growth. We had to tune ourselves according to that. Now, capital is very scarce. We haven’t touched the last round of funding money, but we raised it to ensure it as a buffer. It’s a hard place to be in to be post-facto looking at that. It is never sustainable to be chasing growth at any cost,” Sachdeva added. The recent cuts at the firm will ensure that ShareChat doesn’t have to be forced to raise funds this year, he added. “We don’t think it’s a good idea to enter the market (for a fund raise). ” Revenue from advertising, gifting Advertisements and micro payments for gifting are two key revenue generating tools for the company now. Sachdeva said ShareChat registers 180 million in monthly active users and that the number of gifters had grown about three times in the last 12 months. It launched the in-app virtual gifting feature in September 2020 as a revenue stream. The feature enables users to send virtual gifts in digital tokens to the hosts or the live audio chat room creators, making them feel valued. In October 2022, ShareChat chief product officer Amit Zunjarwad told ET that the virtual gifting feature had touched $50 million in annual recurring revenue with a target to double by December. The virtual gifting feature, dubbed micro-transactions on the platforms, unifies those carried on ShareChat Live Audio chat rooms as well as Moj Live Streaming. Currently, across ShareChat and Moj the annualised gross merchandise value from gifting is around $75 million. Moj has about 300 million active users per month. ShareChat and Moj host over 200 advertisers a month on average. “We believe we can be a great platform for all the political parties to reach out to the right audience… it's not that large a market but it is one of the categories with single digit revenue percentages for other global Western players,” Sachdeva said. Mohalla Tech had acquired MX Takatak from the Times Group to strengthen its short-video play against Instagram Reels and YouTube Shorts. “In the past, we have worked very closely with the Election Commission, and we signed the voluntary code of ethics. We have been working on the organic content piece and I am sure advertisement policies will be a derivative of that,” Sachdeva said on his preparedness to host political advertisements. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Wednesday, 22 Feb, 2023 Experience Your Economic Times Newspaper, The Digital Way! 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