This fundraising comes on heels of VerSe Innovation landing more than $100 million from Google, Microsoft and Falcon Edge’s Alpha Wave Incubation in December, pushing its valuation past $1 billion. The company also counts Lupa Systems, Matrix Partners India, Sequoia Capital India, Falcon Edge Capital and Omidyar Network among its investors. Dailyhunt is currently restructuring its operations to diversify into multiple categories in the wake of the government’s move to cap foreign investment in digital media firms at 26% from October 31.
VerSe said it plans to use the funds to scale up its short video platform Josh, including strengthening its local language content offerings, developing its content creator ecosystem and investments in artificial intelligence and machine learning. In a statement, Josh claims to have over 85 million monthly active users, 40 million daily active users and more than 1.5 billion video plays daily. Investment banking firm Avendus was the sole advisor on the deal.
Short video in India after TikTok
Since the suspension of Bytedance-owned TikTok last June, India’s short-video segment has seen more than a dozen new entrants including Dailyhunt’s Josh, Instagram Reels, Times Internet’s* MX TakaTak, YouTube Shorts, Sharechat’s Moj, InMobi’s Roposo, Mitron and Bolo Indya.
In January, the government made its ban on TikTok permanent, following which Bytedance announced its plans to lay off close to half of its workforce in its biggest international market. Prior to the ban, TikTok had more than 200 million users in India and had clocked 659.5 million downloads in the country, according to estimates by mobile intelligence firm Sensor Tower.
But homegrown short video apps have been able to capture only 40% of TikTok’s market share in India, according to a recent study by management consulting firm Redseer. It said the number of users for short video apps is set to touch 580 million by FY25, from 275 million in FY20.
While homegrown short video apps are yet to achieve the success the TikTok did in India, consolidation is likely on the cards for the sector as several players like Chingari, Bolo Indya and Trell have seen a significant decline in their rankings on the Google Play Store while those like Times Internet’s* MX Takatak, Dailyhunt’s Josh and ShareChat’s Moj have remained among the most downloaded apps in the past few months, ET reported last December.
It’s worth noting that Google Play Store rankings reflects user downloads largely driven by marketing dollars than actual user engagement, retention, and time spent per session. Smaller players told ET in December that they are not focussing on aggressive and expensive user acquisition but building a monetisation model to survive in this cash guzzling business.
Local language content is one of the largest untapped opportunities in the Indian internet space. With nearly half of its population online, India is among the fastest-growing internet markets globally. A recent report by KPMG and Google noted that 9 out of 10 new internet users between 2016 and 2021 will use local languages.
*Disclosure: Times Internet owns ETtech