In what can be perceived as a vote of investor confidence in India’s booming app economy driven by content and a spate of digital creators, VerSe Innovation, the parent company of local language content platform DailyHunt and short video app Josh has raised a fresh $805 million in funding led by Canada Pension Plan Investment Board. Ontario Teachers' Pension Plan Board (Ontario Teachers’), Luxor Capital, Sumeru Ventures and a clutch of existing investors including Sofina Group and Baillie Gifford also backed the investment round that values the company at $5 billion.
The tech startup had been raising capital in tranches over the past one year or so, having bagged about $650 million in funding last year across two tranches backed by a series of investors like Siguler Guff, Carlyle Group, Google and Microsoft. VerSe Innovation’s total fund count now stands at over $2 billion.
The funding, the biggest raised by a startup so far this year, sure comes at a time when the broader industry discourse has been hinting at a shift in investor narrative, with metrics such as path to profitability and sound business models being weighed strictly by investors before infusing capital into startups. This comes amid an uncertain global macro environment, nudging investors to be cautious with deployment of funds. Instability of the domestic markets has added to the unease. The general consensus is that startup funding is likely to come under pressure.
Analysts say that this particular deal has been in the works for sometime and should not be considered as a template to comprehend the present scheme of things. “This deal is a little bit of an outlier because it has been in the works for the last six months. We shouldn’t draw a sense that things have suddenly become better in terms of funding. I think there’s some pressure on funding on the consumer tech side and the pressure is real,” says an analyst. The other two big cheques have been pocketed by Swiggy, which scored $700 million in January, and Byju’s, which announced a $800 million funding in early March.
Flow of funding though is expected to be selective, strong ideas will continue to be supported, say analysts. “The (VerSe Innovation) deal however, does show that large investors are ready to back creator-led economy platforms and content platforms. In fact, analysts at Bain & Company in a recent report said that emergent sectors like creator commerce and web3 or crypto-based investments will continue to see investor interest."
VerSe Innovation claims that DailyHunt, which offers content in 15 local languages, reaches over 350 million users every month. Josh has over 150 million monthly active users (MAU) which it says is the “best MAU (monthly active users) ratio in the industry of 49% and the highest retention.” The firm has also launched PublicVibe in December 2021, a hyper local video platform that provides local updates to users. It has a base of more than 5 million MAUs. “VerSe Innovation’s proprietary technology platform serves one out of every two internet users in the country across Josh, Dailyhunt coupled with PublicVibe,” the company said in a statement.
Local short-video platforms like Josh and Moj have benefited from Chinese app TikTok’s ban in 2020. The platforms have given a reach to a spate of local creators. Josh has more than a lakh creators on board. In fact, India’s creator economy is growing. A recent report by Oxford Economics that studied YouTube’s creator ecosystem gives some sense about the space. It said that YouTube’s creator ecosystem generated considerable economic value, contributing ₹6,800 crore to the Indian GDP and supporting as many as 6,83,9001 full-time equivalent jobs in India in 2020.
VerSe Innovation plans to use the fresh capital to broaden its AI/ML and data science capabilities. Portions of the funds will also be used to explore the Web3 space. “This investment comes at a time when we’re on a path to further expand our offerings, monetisation models, deliver superlative Web 3.0 experiences for the globe and create an IPO scale business,” said founder Virendra Gupta and co-founder Umang Bedi.