Social media company ShareChat, owned by Mohalla Tech Pvt Ltd, has raised approximately Rs 408 crore (equivalent to $48.89 million) in debt from existing investors.

According to a regulatory filing with the RoC, the firm has passed a board resolution to sell 4,895 Series I debentures at an issue price of $10,000 apiece in order to raise INR 408 crore.

Existing investors, including Temasek, Lightspeed, HarbourVest, Moore Strategic, Rimco, and Alkeon, invested in the debt round.

The new fundraising comes at a time when ShareChat was hoping to raise $1.5 billion, or $50 million, in a down round. At the time of its most recent fundraising in June 2022, the company was valued at $5 billion.

According to startup data intelligence platform TheKredible, ShareChat has raised around $1.8 billion from investors including Twitter (now X), Alkeon Capital, Moore Strategic Ventures, and Tencent, among others.

ShareChat has been eyeing a large equity round but the company is finding it difficult to rope in new and existing backers. It also put in several cost-cutting measures and laid off 700 employees across two phases in 2023. The company’s struggle is largely driven by its inability to monetize its user base, which has low purchasing power.

Even after nine years of its operations, ShareChat had to spend nearly Rs 4,000 crore in FY23 to earn Rs 533 crore in revenue. On a unit level, it spent Rs 7.16 to earn a rupee of operating revenue in the last fiscal. This is one of the highest expense-to-revenue ratios for a unicorn in FY23.

The surge in losses was primarily due to the write-off undertaken by the company for the acquisition of Moj’s competitor, MxTakaTak. The company spent heavily ($700 million via cash and stock) to acquire the Times Internet-backed company.

While ShareChat has almost no competition after the blanket ban on China-origin apps like Bytedance-owned Hello, its short video app Moj competes with Dailyhunt’s Josh, YouTube Shorts and Instagram.