While Microsoft Corp. is still ironing out details with ByteDance to acquire its short-video app TikTok, the American technology conglomerate is in talks with Indian social media entertainment app ShareChat to invest around USD 100 million.
Two people aware of the development told local business newspaper Mint that it would take a couple of months for the deal to get finalized as the discussions are in early stage.
Bengaluru-based ShareChat is already in discussions with its existing investors SAIF Partners, Lightspeed Venture Partners, and Twitter to raise USD 200 million. It raised USD 100 million in its Series D round last year at a valuation of USD 650 million. The round was led by Twitter and TrustBridge with participation from other existing investors including Shunwei Capital, Lightspeed Venture Partners, SAIF Capital, India Quotient, and Morningside Venture Capital.
The company has raised a total of USD 223 million till now.
“Microsoft is looking to make inroads into digital ad space, something that the company missed out on with its search platform Bing. Its ShareChat funding is geared to make inroads into India’s social advertising space,” Sanjeev Kumar, forecast analyst at Forrester, told KrASIA.
The news comes at a time when the short-video and digital entertainment sector has suddenly intrigued investors’ interest in the country as dozens of local players try to claim the space left open by the departure of the market leader, TikTok.
ShareChat was the direct competitor of ByteDance’s other short-video app Helo—which was also one of the platforms that India banned last month. Both the apps were counting on their local language content to penetrate tier 2, 3, and 4 cities.
In its negotiations with ByteDance to buy TikTok’s business in the US, Canada, Australia, and New Zealand, Microsoft is now seeking to acquire its global business including India’s, according to a Financial Times report.
“Microsoft started with Tiktok’s US arm keeping in mind the US digital advertising market which is more than 25 times bigger than India. It will get more than a foot in the door with this acquisition, not to forget the sizable user base it gets in the US with this acquisition,” Kumar said.
Microsoft’s acquisition of TikTok’s global business and its investment in ShareChat would be an interesting play as Microsoft would like ShareChat and TikTok, which have always been up in arms, to utilize each other’s strength if both the deals materialize.
According to Kumar, TikTok can stand on its own considering its global appeal but believes ShareChat to be much more diverse than TikTok.
“The synergy can come in from the content creators, reaching a diverse set of audiences given the local appeal that ShareChat carries. Both the apps have been successful outside the metros and have the ingredients to capture the digital advertising spend channeled towards India’s next big cities in the making.”