India: NewsDog in funding talks with Tencent to raise up to $40m

Tencent
Visitors use their smartphones underneath the logo of Tencent at the Global Mobile Internet Conference in Beijing May 6, 2014. REUTERS/Kim Kyung-Hoon/File Photo

News and entertainment content aggregator NewsDog is in talks to raise $35-40 million from Tencent Corp. and others as start-up investors look for content providers that can attract a large user base online, three people familiar with the matter said.

Tencent, which has invested in Flipkart, Ola, Practo and a few other internet firms, wants to invest in a content start-up and has identified NewsDog as an attractive bet, the three people cited above said. Mint couldn’t ascertain the identity of the other investors talking to NewsDog.

Both NewsDog and Tencent declined to comment.

If the investment goes through, it will be the one of the largest start-up deals in the news and entertainment content business.

Investments in content start-ups are picking up pace, as venture capital (VC) firms bet that many Indian internet users will want alternatives to existing platforms like YouTube, Facebook and others and that after reaching a large number of users, start-ups can then attract substantial advertising revenues. Separately, companies such as Amazon, Netflix and Hotstar are pouring hundreds of crore of rupees to expand their content collections.

Still, the proposed NewsDog investment is relatively outsized given that within the content business, news is seen as the least lucrative model.

NewsDog, owned by Hong Kong-based Hacker Interstellar, was launched in early 2016 by Chen Yukun, a Chinese entrepreneur, and Yi Ma, an ex-employee at Chinese search firm Baidu. While it launched less than two years ago, NewsDog has quickly become one of India’s three top news and entertainment apps, along with UC News, which is owned by Tencent-rival Alibaba Group, and local start-up DailyHunt.

NewsDog, which has 40 employees in offices in India and Hong Kong, is not nearly as well-known to urban audiences as other internet firms such as Flipkart and Amazon but its app is favoured by people in smaller cities and towns. One reason behind its popularity is that it offers content in 10 local languages apart from English.

The content platform has more than 40 million users and adds more than 40,000 new articles every day that are aggregated from over 2,000 media houses and 15,000 writers, chief executive Yukun and chief operating officer Ma said in an email through a spokesperson. A majority of its customers browse local language content.

“The target is hundreds of millions of users this year. Why can we do that? Because we’re building a content ecosystem around text, image, video, online test (NewsDog malamaal), and we are also adopting blockchain technology to make NewsDog grow faster and the user ecosystem transparent (NewsDog is in cooperation with CNN, a Blockchain-based Content Ecosystem),” Yukun said.

NewsDog is one of many Asian internet platforms that have become popular with Indians in smaller cities and towns. Mint reported last July that apps such as Xender, UC Browser, NewsDog and MxPlayer have become among the most widely used internet services in the country. These apps are tailor-made for low-cost smartphones, which comprise a majority of smartphone sales in the country. In design and usage, too, these apps are more suited to the tastes and browsing habits of Indians living outside of the big cities.

While these platforms and content start-ups have done well to attract customers and investments, their ability to generate ad revenues, which is the main source of earning money for most content start-ups, remains questionable in a business dominated by Google and Facebook Inc.

NewsDog said it will work closely with Google and Facebook to reach more advertisers and it will introduce new data-based services for advertisers.

“Firstly, we need to cooperate with Google and Facebook, they are helping us to reach more advertisers quickly, it’s great help for NewsDog. Secondly, outside of Google and Facebook, when we localize, we see more potential monetization chances. For example, fintech companies need more services than what Google and Facebook can offer, we can provide them things Google won’t provide, like data, credit system, etc,” Ma said.

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This article was first published on Livemint.com