Dailyhunt parent hungry for acquisitions to drive core biz
VerSe Innovation is looking to strengthen its key verticals, including news and short-videos
VerSe Innovation, the parent of news aggregator Dailyhunt and short video sharing app Josh, is “acquisition hungry,” embarking on a journey to expand its user base, explore monetization opportunities and diversify content offerings, co-founder Umang Bedi said in an interview.
Earlier this month, the firm clinched its largest deal to date, acquiring USbased subscription service Magzter in a cash-stock transaction of undisclosed value. This move was aimed at foraying into international markets, and enter the premium subscription segment.
“We have been looking at acquisitions to improve our tech capabilities, product functionality, etc. Now, we are M&A-focused than ever, and our criteria (for target companies) is to have significant revenue scale, besides being Ebitda-positive,” Bedi added. Ebitda stands for earnings before interest, taxes, depreciation and amortization.
The company will finance the acquisitions using its existing cash reserves.
“We still have a lot of capital left over from the last fundraise,: said Bedi, adding that VerSe has significant dry powder of over $100 million and is in “no rush” to raise primary capital.
In April 2022, VerSe was valued at $5 billion during its $805 million round. It counts Goldman Sachs, Falcon Edge Capital, Sequoia Capital India, Omidyar Network India and Matrix Partners among its investors.
The company is targeting acquisitions to strengthen its core business, including news and infotainment, shortvideo content and ad-tech. The acquisitions will be funded with a combination of cash and stock, Bedi said.
Citing Meta’s acquisition of Instagram
VERSE Innovation acquired US-based subscription service Magzter earlier this month
THE company has significant dry powder of over $100 mn, is in “no rush” to raise primary capital
and WhatsApp, Deepika Ramani, a partner at executive search and talent advisory firm ABC Consultants, said social media firms with a certain scale can effectively expand their user base and offerings through acquisitions.
“If you look at any organization of this nature, they are looking to increase revenue-generating opportunities, and subscriber base. For instance, the Magzter acquisition in many ways is going to do them a lot of good as the company has an extremely extensive catalogue. With this acquisition, VerSe could see their
THE Dailyhunt parent will finance the acquisitions using its existing cash reserves
VERSE has been in advanced talks to acquire Koo, according to news reports
valuation increase multifold,” she added.
Over the last five years, VerSe has acquired social media app GolBol, photo-video sharing community app Vebbler, artificial intelligence (AI) solutions provider Cognirel and online news platform Local Play, according to data sourced from Tracxn. It has spent less than $100 million on each of its previous acquisitions.
VerSe has been in advanced discussions to acquire social networking startup Koo, according to news reports.
Experts anticipate a surge in consolidation in the social media space, with companies struggling to generate revenues and sustain growth amid uncertain macroeconomic conditions, and declining advertising budgets.
The funding winter coupled with regulatory changes, such as a 28% goods and services taxes on online gaming, along with bans on betting and gambling, have added to the woes of the advertising industry.
Even major players, such as Google and Meta, have seen stagnant or slower revenue growth, reflecting the broader industry trend.
However, according to Bedi, VerSe managed to buck the trend, and is witnessing steady revenue growth from online advertising and subscription services across its applications, influencer marketing and other online platforms. In FY23, its operating revenue grew 51% to ₹1,456 crore, the company’s latest filings sourced from Tofler showed.
Innovation has been key to sustain growth. It launched Xpresso, an AI-driven newsfeed in local languages, tailored for young audiences, and signed licensing agreements with over 100,000 partners, including influencers and news portals, for aggregating content. It also employs AI algorithms to analyse content, leveraging browsing behaviour of users to provide personalized experiences.