BENGALURU - Indian social media company Mohalla Tech has secured a $255 million investment for its platforms ShareChat and Moj from leading investors such as Google (NASDAQ:GOOGL) and Temasek. This funding comes as the company reports a significant operational revenue increase to Rs 533 crore in FY23, marking a nearly 60% jump from the previous fiscal year. The growth is largely attributed to 'ShareChat Coin', which now constitutes over half of their revenue at Rs 285 crore.
Despite this positive revenue trend, Mohalla Tech has faced challenges, including soaring expenses that have led to mounting losses. The company's losses expanded by over 38% to INR 4,064.31 crore in FY23, with total expenses reaching INR 4,693.16 crore and finance costs skyrocketing by an unprecedented 144%. Notably, employee benefit expenses surged by approximately 38%. These financial strains occurred even after the firm slashed promotional spending by half to Rs 564 crore and laid off more than five hundred employees.
The company also reported a drastic reduction in cash reserves, which plummeted to just INR 18.03 crore from INR 446.48 crore previously recorded. This liquidity crunch comes despite Mohalla Tech's strategic acquisition of MX TakaTak for over $600 million earlier in the year as it expanded into short-video content.
Mohalla Tech's aggressive expansion and acquisition strategy have been part of its efforts to monetize its substantial user base across ShareChat and Moj, which report nearly half a billion monthly active users combined. However, these efforts have not been without operational hurdles. The company has had to undertake severe workforce reductions, cutting almost one-third of its employees. Additionally, key co-founders and senior leaders have exited the company amidst efforts to streamline operations and reduce the high cash burn rates that have long impacted Mohalla Tech's financial health.
Despite these setbacks and an EBITDA margin of negative four hundred one percent, Mohalla Tech is navigating through these challenges with new fundraising efforts. The co-founders who have stepped down from active roles within the company are now spearheading a bridge round valued at $50 million at a steep discount while managing current assets totaling Rs 1,195 crore.
Earlier in June, the tech firm had closed a successful $520 million funding round at a $5 billion valuation but has since faced significant operational challenges. As Mohalla Tech continues on its path of growth and restructuring, the latest investment is a vote of confidence from top-tier investors in its potential for long-term success amidst the current financial landscape.
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