ShareChat Expands Employee Stock Options Despite Financial Challenges

Mohalla Tech, the company behind popular social media platforms ShareChat and Moj, has announced an increase in its employee stock option (ESOP) pool. This move comes shortly after securing a $49 million debt financing round from existing investors.

Expanding Ownership and Talent Focus

ShareChat’s board approved the addition of 260,000 ESOP options to its existing plan, bringing the total to 846,300 options, as per a regulatory filing. Each set of 100 options will convert into one equity share at a predetermined future date. This expansion aims to incentivize employee ownership and attract, retain, and inspire top talent.

Valuation Decline Amidst Monetization Struggles

Financial data firm Fintrackr estimates the new ESOPs to be worth Rs 1,017 crore ($123 million), bringing the total pool value to Rs 3,310 crore ($400 million). However, despite raising over $1.2 billion from investors like Twitter (now X), Alkeon Capital, and Tencent, ShareChat hasn’t shown significant revenue generation.

TheKredible, a startup data platform, reports a valuation drop below $2 billion in the recent bridge round, compared to $5 billion in June 2022. ShareChat also announced a doubling of ESOP ownership for existing employees during the previous fundraising.

High Expenses and Revenue Challenges

Financial reports indicate ShareChat spent nearly Rs 4,000 crore to generate Rs 533 crore in revenue during FY23. This translates to an alarming expense-to-revenue ratio of Rs 7.16 per rupee earned, posing a significant financial hurdle for the unicorn company.