US-based technology major Google is looking to enter India’s fast-growing short-video app space through a possible acquisition of Twitter-backed ShareChat application, which could be valued at around $1.03 billion.
The move comes at a time when a number of players are trying to fill the void after the Indian government banned TikTok earlier this year.
The ban not only attracted a slew of local players but also forced social networking giant Facebook to launch its offering, Instagram Reels, in India. Google also launched YouTube Shorts in India but hasn’t seen any success to date.
Interestingly, ShareChat was previously in talks with Microsoft Corp. for an investment of around $100 million.
Google has already signed a term sheet with Bengaluru-based startup, ShareChat, and is currently conducting a due diligence exercise, local media reported.
With over 160 million users, ShareChat is known for targeting non-English speaking audiences in India and has a presence in over 15 Indian languages. It acquired 100 million users after India banned TikTok earlier this year.
The start-up also launched Moj video-sharing service just a day after the TikTok ban. The new service garnered about 80 million users since launch in July 2020.
“It is a good time to sell since this is a money intensive business. There is a lot of capital required to get music licenses, influencers etc. Moreover, it is a very competitive market to be in with the launch of so many players,” a person familiar with negotiations was quoted as saying by the Economic Times.
The person said that ShareChat founders might retain a small stake post the deal. At the same time, all the existing investors in the five-year-old startup will exit the company if the sale negotiation with Google comes to fruition.
ShareChat had been looking to raise funds to better compete with various short-video format applications in India. In September, it managed to raise $40 million from a slew of investors including Twitter, SAIF Partners, Lightspeed Ventures and India Quotient at a valuation of $650 million. However, the requirement was around $150-200 million.
Twitter had previously led ShareChat’s Series D funding round with additional backing by SAIF Partners, Lightspeed Ventures and India Quotient, as per media reports. ShareChat has so far raised $264 million.
The deal, if materialized, will allow ShareChat to expand globally taking the platform to countries in the Middle East and invest in research and development.
The startup had previously set up a R&D lab in Silicon Valley and brought on board former Uber product leader Gaurav Mishra. The lab is working on artificial intelligence and machine learning-driven capabilities for its social media platform. Google has earmarked $10 billion for investments in India. It has already invested and $4.5 billion investment in Reliance Jio Platforms for a 7.73% stake. The transaction got completed on Tuesday days after India’s competition watchdog the Competition Commission of India (CCI) gave its approval, as per an official statement by Reliance Industries Limited.