Social media startup ShareChat’s valuation has cratered beneath $2 billion from practically $5 billion following a brand new funding spherical, a supply conversant in the scenario instructed For Millionaires, 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 have been raised however strongly denied that its new valuation was beneath $2 billion, asserting there was “no valuation” hooked up to the spherical.

Present traders 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 response to a supply with direct data of the phrases. The supply requested anonymity to talk candidly. For Millionaires reported in December that ShareChat was dealing with a steep valuation lower.

ShareChat additionally counts Google, X, Snap, Tiger International and Tencent amongst its backers. It has raised about $1.3 billion up to now. 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 slicing 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 progress,” Ankush Sachdeva, ShareChat’s co-founder and chief government, instructed For Millionaires in an interview.

ShareChat has not spent cash buying customers previously yr, with Sachdeva crediting enhancements to the startup’s content material suggestion engine for driving person retention and engagement. The corporate has additionally invested closely in AI expertise, significantly for senior roles in its London-based workforce. 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 in a position to pare down its single-largest expense, the price to serve content material, he mentioned. “Once you fetch content material on certainly one of our apps, we do a number 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 mentioned.

ShareChat has lowered its month-to-month money burn by 90% over the previous two years whereas doubling income, attracting giant FMCG companies 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.

“By way of visitors, ours is decrease than these of Instagram and YouTube, however we’re the most important when it comes to a standalone app,” mentioned Sachdeva. He believes ShareChat’s distinctive concentrate on 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.