Social media startup ShareChat’s valuation has cratered beneath $2 billion from practically $5 billion in a brand new funding spherical, a supply aware of the scenario informed 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 beneath $2 billion, asserting there was “no valuation” connected to the spherical.

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

ShareChat additionally counts Google, X, Snap, Tiger World and Tencent amongst its backers. It has raised about $1.75 billion thus far. 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 constructive 12 months, aggressively slicing bills whereas managing to double its income. “When the market turned, we needed to mood [acquisitions and creator payments] and transfer in the direction of extra worthwhile progress,” Ankush Sachdeva, ShareChat’s co-founder and chief government, informed TechCrunch in an interview.

ShareChat has not spent cash buying customers previously 12 months, with Sachdeva crediting enhancements to the startup’s content material suggestion engine for driving consumer retention and engagement. The corporate has additionally invested closely in AI expertise, notably for senior roles in its London-based crew. 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 price to serve content material, he mentioned. “If you fetch content material on certainly one of our apps, we do plenty of computation to seek out the ten greatest content material. To serve and devour that, there may be one other supply price. Optimizing this has helped us decrease our burn,” he mentioned.

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

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

“When it comes to site visitors, ours is decrease than these of Instagram and YouTube, however we’re the most important by way of a standalone app,” mentioned Sachdeva. He believes ShareChat’s distinctive deal with 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.