India’s coveted unicorn club is adding new members at a pace that is faster than expected in a pandemic year. The latest to join the list of startups valued at over $1 billion are content platforms Dailyhunt and Glance.
The two — the first unicorns from the Indian social media and content space — have benefitted from the country’s ban on Chinese short-video platform TikTok, and the accelerated internet adoption following the pandemic.
On Tuesday it was announced that Dailyhunt completed a $100 million+ round from AlphaWave (a unit of Falcon Edge Capital), Google and Microsoft, while Glance raised $145 million in a primary investment round from Google and existing investor Mithril Capital, launching them into the unicorn club.
So far, 11 new unicorns have emerged in India this year including Tuesday’s entrants.
“This [Glance and Dailyhunt’s valuation] goes to show that in an era where attention is at a premium, content is king. For a country of over 1.3 billion people, the number of unicorns we have in the content product space is disproportionately low. The rounds of Dailyhunt and Glance are a testament to the content thesis and adds to the Atmanirbhar [self-reliance] moment for Indian tech startups in the media and content space. Product-first creations that offer choice and are catered to Indian tastes will lead the market and this is proof of the same,” said Siddarth Pai, founding partner of early-stage venture capital firm 3one4Capital.
Bengaluru-based Glance is an 18-month-old mobile content platform founded by Naveen Tewari, who is also the founder of India’s earliest unicorn InMobi. Dailyhunt, also based in Bengaluru, is a content and news aggregator providing local language content.
“This a great validation of the opportunity in India for social media beyond Instagram and Facebook. These are still early days and we believe that this should only spur the entrepreneurs even more,” said Anand Lunia, founding partner of India Quotient.
The funding comes almost five months after Google, the common investor in Dailyhunt and Glance, announced its plans to invest $10 billion in India over the next 5-7 years by way of equity investments, partnerships and other arrangements to ‘accelerate digitisation’ in the country.
Of the $10 billion, Google is investing $4.5 billion into Reliance Industries-owned Jio Platforms for a 7.7 per cent stake in the company. According to earlier reports, Reliance was in talks with ByteDance to buy TikTok in India.
“In the last two years alone, 100 million new internet users have come online from rural India. Rural consumption now accounts for roughly 45 per cent of overall mobile data usage in the country and is primarily focused on online video. But many of these internet users have trouble finding content to read or services they can use confidently, in their own language. And this significantly limits the value of the internet for them, particularly at a time like this when the internet is the lifeline of so many people,” Caesar Sengupta, VP, Google, said in a blog post on Tuesday.
“These investments underline our strong belief in partnering deeply with India’s innovative startups, and our commitment to working towards the shared goal of building a truly-inclusive digital economy,” he added.
Homegrown video apps gaining traction
The ban on 59 Chinese apps including TikTok was the fallout of a border skirmish between Indian and Chinese troops in June. The move turned into a huge opportunity for homegrown short video apps, which wasted no time in wooing TikTok’s 200 million Indian user base.
Chingari, a bootstrapped Made in India app endorsed by prominent industrialist Anand Mahindra, gained more than 3.5 million downloads within 24 hours of the TikTok ban. By September, it had crossed 30 million downloads.
Sharechat, a homegrown startup incorporated in 2015, which attracted $258 million in the last two years, reported 500,000 new users per hour soon after the TikTok ban. ShareChat and its short-video app Moj together have more than 240 million monthly active users.
Glance, which delivers artificial intelligence-driven personalised content in multiple languages including English, Hindi, Tamil, Telugu, and Bahasa, claims to have more than 115 million daily active users that spend 25 minutes per day. It had acquired Roposo, a video-sharing social media platform, in November last year. Roposo claims to have 33 million monthly active users who spend an average of 20 minutes daily on the platform.
On the other hand, VerSe Innovation serves vernacular content in 14 languages through platforms like Dailyhunt and Josh apps. Josh supports 12 India languages and has been one of the most downloaded Indian short-video apps on Google Play Store India with over 77 million monthly active users. Facebook had also started testing a short video feature within its main app in India.
Asked if India is capable of producing TikTok’s equivalent, Pai said, “India is the last, large, unified market that’s left in the world for consumer internet countries. Unlike the US, which had a head start and is now home to the largest internet companies in the world, or China, which benefited from its quasi-closeness that allowed it to incubate giants without much outside competition India welcomed foreign competition and thus India’s YouTube is YouTube, her Twitter is Twitter – the larger foreign companies, with their brand equity, capital and experience, quickly rose to the same level of prominence here as they enjoyed in their home countries.”
“But we’re slowly seeing the rise of homegrown giants in this space and these two unicorns will be the first among many. But the first battle is for the country and once such startups establish a pre-eminent position in India, then the battle for other geographies can follow. The Indian market is crucial as her diaspora can be ambassadors for such apps and help launch them in global markets too,” he added.
According to a recent report titled ‘Short-form: Rising Amidst Cluttered Content Space’ by consulting firm RedSeer released earlier this month, Josh has emerged as the leader in its space in overall experience with the highest indexed score of 56 out of 100. This was followed by InMobi’s Roposo (40) and Times-owned MX Takatak (38) respectively.
The report also highlighted that short-form content penetration currently is around 45 per cent of around 600 million internet users in India. While 40 per cent of TikTok’s market has been captured by the new players, some users are still unwilling to shift for lack of quality and lesser velocity of content creation.
The future belongs to even newer companies, and that need of the hour is to support as many founders as possible and give them a long rope to discover a market, the experts felt.
“The monopoly of existing networks and the disparity in spending power is an issue, and I fear that we need to solve this from the perspective of national interest while not hurting end consumers. We need to view a company like Google and FB as a core tech powerhouse and merely importing such products means that a whole lot of tech around vision, AI, streaming, audio and video processing etc will be imported forever. Data is the new oil, and we don’t want to import it forever like we have been, from other countries. India has to be able to produce great companies in content and social media space and I am glad our founders are up for it,” Lunia said.
The fact that the sector is attracting interest from the likes of Google and Microsoft speaks volume of the growth potential it offers.
Raja Lahiri, partner, Grant Thornton Bharat, said: “The social media space in India has always attracted investor interest. What has been a big difference this year is, how, the pandemic and its economic implications have accelerated India’s climb to a preferred investment destination. Of course, the key would be how Indian entrepreneurs are able to attract, retain users, and monetise them in the long run.”
“By partnering with Google, the company plans to take its product to the rest of Asia and launch in the US — where it will team up with carriers — and South America in 2021. Glance is currently focused on acquiring users and has just begun experimenting with ad-based monetisation models,” Naveen Tewari, founder and CEO of Glance and InMobi Group, told Bloomberg following the latest fundraising.
Dailyhunt, meanwhile, prior to the latest funding, had raised a total of $134.5 million from Matrix Partners India, Sequoia Capital India, Falcon Edge Capital, and Goldman Sachs, among others. The company said Josh will play a key role in the Digital Bharat and Atmanirbhar Bharat (self-reliant India) initiatives as it also seeks to provide a platform for indigenous creators to promote the heritage and culture of the country.
In September, content-sharing platform ShareChat raised $40 million from investors including Twitter Inc and Lightspeed Ventures as it seeks to boost usage of its new short-video app Moj. Both Microsoft and Google have reportedly shown interest in investing in ShareChat.
One of the ShareChat investors that DealStreetAsia spoke to said, “The funding news of Dailyhunt and Glance is interesting, it’s super positive for the sector. More money coming in is an endorsement that there is more potential in this business. Whoever creates a large network and monetise it, will win.”
On ShareChat’s funding plans, he said, “The financing process is very much on. You will hear some good news by as soon as February next year.” He refused to divulge the names of potential investors.
In August, Chingari (meaning ‘spark’) raised $1.3 million in a seed round from AngelList India, Utsav Somani’s iSeed, Village Global, LogX Ventures, and Reliance-owned SaaS startup NowFloats’ co-founder Jasminder Singh Gulati.
Another short-video app Mitron raised $5 million led by Nexus Venture Partners in August. 3one4 Capital and Arun Tadanki’s private syndicate on LetsVenture also participated in the latest round.
“We live in an era where attention is at a premium — with the range of content platforms rivalling the content on these very platforms. A large amount of this has always been adapted to Indian tastes, not grown from ground-up keeping this in mind. Indian startups are slowly rising to eminence in this space and the larger global players, who always have a keen eye for movement in the country, will want to capitalise upon such startups and invest in and partner with them,” Pai said.