This is even more impressive, considering that online behaviour increasingly guides information discovery, social connections and purchasing decisions globally.
That said, ShareChat’s path to profitability has been a long one.
Founded in 2015, ShareChat currently boasts over 180 million monthly active users. In contrast, its global peers like WhatsApp and Instagram clock 535.8 million and 390 million users, respectively, with a combined 5+ billion Play Store downloads.
But ShareChat’s priorities are no longer limited to scaling its user base — the platform is focusing on user-retention and enhancing its artificial intelligence/machine learning (AI/ML) technology.
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Monetisation — Money Matters
In the highly competitive digital space, monetisation is a challenge for social media companies, even for big tech players, whose primary source of revenue largely remains advertising. Subscription works for some global players, but that’s not always true in a price-sensitive market like India.
ShareChat CFO Manohar Charan says the company is trying to generate revenue beyond ads. Taking a cue from other apps in emerging economies, like WeChat and TikTok, ShareChat introduced live streaming and ShareChat coins to drive revenue.
These coins act as virtual assets to make in-app purchases for virtual avatars, buying gifts for users and tipping favourite creators via live streaming within the platform.
“Almost half of our revenue gets powered through ShareChat coins. So it solves the equation as it adds [to] our advertising, ARPUs are now around a dollar. Live streaming adds another $1.2 to ARPU, and that [takes] your ARPU north of $2,” Charan said.
The reason ShareChat achieved profitability now, per Charan, is because, when “we started on this cost optimisation journey, we were spending $1.80 per user per year. Now we’re spending like 70 cents per user annually on servers for the same amount of time”.
Recommendation-Driven Growth
ShareChat’s growth is fueled by its advanced machine-learning technology. Platforms like Instagram and TikTok have also witnessed improved engagements via personalised recommendations.
While most homegrown apps have made big marketing spends, ShareChat has made substantial investments in its tech enterprise.
“We have been able to build a world-class recommended system. For example, [in March 2024], our retention improved by 10% and time spent increased by 20%,” Chief Product Officer Amit Zunjarwad says, explaining how ShareChat’s user base is increasing as it is investing in keeping users glued to their screens.
While recommendations seem to be leading the charge for ShareChat, its unique language proposition stands out. Unlike most platforms, ShareChat enables communication across 15 Indian languages. ”We have enabled users to consume content in the language of their choice because that’s how diverse India is, and that’s what Indian users want to consume,” says Zunjarwad.
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The flip side is that ShareChat’s ad options and associations with luxury brands are skewed, necessitating moving beyond the fast-moving consumer goods (FMCG) space for advertising. But ShareChat’s leadership remains optimistic.
“We are a regional language content platform. So even though India is a $15 billion advertising market, the market we are playing or fighting for is [worth] barely $1 billion. But as the economy grows in the next 3 to 5 years, we expect the regional language ads to go from $1 billion to [about] $7-8 billion. There is 8-10x growth potential in the next 5 years,” says Charan.
Sustaining Investor Interest
ShareChat made significant strides on the investment front in 2024 — the platform bagged $65 million in funding through two rounds. So far, the company has raised $1.22 billion across 16 funding rounds, per data from Tracxn. ShareChat’s ability to retain marquee investors like Temasek, Tiger Global Management, HarbourVest Partners, Moore Strategic, Alkeon Capital Management, Rimco and Lightspeed India, among others, is an advantage,
One reason for sustained investor interest is the platform’s emphasis on maintaining profitability. “Funding rounds in 2021-22 [came[ at a time when we were on a scale-up journey. Our monetisation was at a very early stage. There was literally a ‘land-grab’ happening, and competition was super intense. So, the capital of that era was to invest in growth. The capital that we’ve raised now is when the company is [on] a very different part of its journey. For the last couple of years, we’ve been prioritising profitability,” says Charan.
However, like most companies, ShareChat is not immune to the shocks unicorns in India have been susceptible to. In April, reports suggested that the unicorn’s valuation fell to $2 billion from $5 billion after a funding round. However, Charan believes that startups globally have experienced a valuation shakeup this year and that it will not dictate the company’s long-term outlook.
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“Valuations are a ‘point-in-time’ view on a company and its future. Valuations may fluctuate in a quarter or every two years, but if you take a long-term view, our aim is to create a $20 billion+ company 5-10 years down the line,” says Charan.
However, he maintains that valuation has not changed since the last price discovery happened for ShareChat in 2022 during a Series H round and adds, “Our prices—our valuation—has not changed. People may be saying, ‘If the company were to go public based on the comparable valuation of public companies, would they get the same valuation?’ Those kinds of questions are more analytical or argumentative. So, till the time market-like price discovery happens, it is difficult to say. Multiples and valuations in the market in general have shifted, and as a market participant, one’s valuation is bound to follow what the market is doing.”
The Future Of Social Media
Growth across social media platforms is largely being driven by personalisation. For ShareChat, too, whether it is through the recommendation systems or chat rooms, users get a more personalised experience. Despite platforms like ShareChat being able to be a place of creator economy, the premise for social media and messaging apps for sustained social connections remains unsatiated.
“Filter bubbles and recommender algorithms inevitably also have an individualising effect, where recommendations are so personalised that they mar the supposed ‘social’ nature of social media platforms,” says Preeti Raghunath, Lecturer — Digital Media & Society at the University Of Sheffield, UK.
She says it is important for us to retain and continue to deepen our offline ties, with digital media platforms providing an additional layer of social connections rather than serving as a replacement. “We are living in times when humanity has never been this connected before, and yet, we have the epidemic of loneliness chipping away at the human and social sides of our lives,” Raghunath says.
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Another persistent and more dangerous issue is that of misinformation. While traditional, global tech giants attract more attention from fact-checkers within India, platforms like ShareChat, which are more localised, see little to no monitoring by fact-checking agencies. This, in turn, means that such platforms’ internal content flagging systems need to be more efficient in real-time.
ShareChat officials say they are tackling the menace with both algorithms and humans. “We have moderation checks at multiple places. Once certain content passes an initial threshold of popularity, we explicitly start checking it through our human moderation pipeline. We also have algorithms that moderate every single content,” says Zunjarwad.
According to an Ericsson Mobility Report, India’s 5G user base is projected to have crossed 270 million by the end of 2024. This growth in the number of digital users translates to the need for a proportional digital infrastructure, which in turn sparks concerns about resource allocation.
Raghunath says India needs a framework to ensure a balanced allocation of resources to global and homegrown technology companies. “It is now established through research and some disclosures that certain forms of AI/ML technologies are much more resource intensive, with land acquisition and massive energy and water requirements being key to their functioning … We need a somewhat balanced approach beyond green building standards alone,” says Raghunath.
ShareChat is confident in its ability to lead from the front in the homegrown social media space, and its trajectory so far reflects just how crucial innovation, adaptibility, and localisation are. It will be interesting to see how the platform navigates difficulties like user fatigue, misinformation and the evolving demands of a digital society. For now, the stage is set for ShareChat to be the benchmark of what it means to be a truly Indian platform in this global digital era.
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