Dailyhunt parent raises $805 mn at $5 bn valn; aims to achieve profitability in 3 yrs

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VerSe Innovation Pvt Ltd, which operates technology platforms like news and content aggregator Dailyhunt and short video editor Josh, has raised $805 million at 1.5 times jump in valuation in less than three months as part of its new Series J funding round. 

The latest investment has taken VerSe Innovation’s valuation to around $5 billion, the company’s co-founders Umang Bedi and Virendra Gupta told VCCircle in virtual interaction. VerSe Innovation was last valued at $3.1 billion in January this year after it raised $28 million as a part of its Series I funding round from the Canada Pension Plan Investment Board (CPP Investments), VCCircle reported, citing the company’s regulatory filings.  

VerSe Innovation’s latest funding round was led by CPP Investments, which alone wrote a $425 million cheque. New investors Ontario Teachers' Pension Plan Board, Luxor Capital, Sumeru Ventures and existing investors Sofina Group, Baillie Gifford, among others participated in this round. 

The fundraising did not include a secondary component and existing investors, including Matrix Partners, which is the second-largest external shareholder in the company after CPP Investments with around 9% stake, remain invested. Matrix Partners bet on VerSe Innovation as early as 2009, according to VCCEdge, the intelligence platform of VCCircle

“We believe the team is just getting started on creating an IPO scale institution and look forward to the next phase of this journey," said Vikram Vaidyanathan, managing director, Matrix India. 

VerSe Innovation will use the fresh capital to deepen and broaden its artificial intelligence (AI), machine learning (ML) and data science capabilities, the company said in a statement separately. 

The company's massive funding round comes when stocks of recently listed new-age technology companies have taken a severe beating and heavily funded startups may be looking at a down round or even losing their unicorn status due to concerns triggered by the uncertain geopolitical climate. Unicorns are private companies that are valued at over $1 billion. Last month, VCCircle reported that Blinkit is set to merge with online food aggregator and delivery platform Zomato which will result in the quick commerce company losing its unicorn tag.  

“In the light of such a bleak economic environment, to have a large quantum and highest quality of capital coming in is a huge booster and validation for the business that we have built at VerSe Innovation, which is really been built on fiscal discipline on cracking that three-prong board of user growth, engagement, and most importantly, monetization of the local language ecosystem,” noted Bedi. 

The company is also looking to build newer monetization models through influencers, e-commerce and live streaming as it aims to achieve profitability on a corporate level in the next two to three years, Bedi and Gupta said. 

The co-founders also told VCCircle that the company is making forays into the Web3.0 space by providing experiences across its local language creator base of over 50 million creators and its local language content ecosystem, which the company claims to witness over 80 billion video plays per month. Bedi and Gupta also said that VerSe Innovation is looking to launch its products internationally without naming any specific countries but added that the company will be making the announcements in the next two weeks.  

VerSe Innovation operates three major digital platforms -- Dailyhunt, Josh and PublicVibe. But the company generates revenue only from Dailyhunt as of now, Bedi said. The company had recently conducted a pilot for the monetization of Josh and said that it expects Josh to start contributing to the company’s revenue from FY23 onwards. 

“We have started the Josh monetization pilot in the last two months, we have conducted over 200 campaigns with partners and advertisers, but we have taken all that revenue and passed it to the influencers, and we didn’t recognize that,” said Bedi. 

Going forward, the company expects Dailyhunt’s business to grow steadily at 40-60%, and its other businesses to witness exponential growth because they're coming off a low base, Bedi added. 

VerSe Innovation clocked absolute revenue of $128 million in FY22, Bedi said. According to VerSe Innovation’s regulatory filings with the ministry of corporate affairs (MCA), the company had clocked a revenue of $105 million for FY21 on a consolidated basis. 

Both the founders said they want the revenue to grow further and its monetization plans to work before the company plans for an initial public offering (IPO). 

“We do not want to do it prematurely and so while that's (IPO) a very exciting option, I think IPOs have taught us that you got to have a real business that's either generating cash or your costs are coming down significantly,” Bedi added. 

Avendus Capital was the exclusive financial advisor to VerSe Innovation on the transaction.