Content and news aggregation app Dailyhunt is planning an initial public offering (IPO) within a two-three-year timeline with the market turning more favourable to tech stocks in the past few years, a top executive said in an interview. Dailyhunt’s IPO plans come at a time when several tech start-ups have been looking at the public markets for raising money and paving exits for their investors.
The year 2021 was a record-breaking point for India’s tech start-ups, with investors netting $14 billion in overall exits across both secondary transactions and IPOs. Out of $14 billion, venture capital (VC) and private equity (PE) investors earned around $5.3 billion in exits from tech start-ups that went public during the year, according to a recent report by consulting firm Bain & Company.
In an interview with FE, Dailyhunt’s co-founder Virendra Gupta said that the firm will work on creating an IPO ready business within the next two to three years with a focus on breaching the Ebitda profitability metric within the same timeline.
Dailyhunt’s parent company VerSe Innovation recently announced an $805 million fundraising last week at a valuation of $5 billion. This was the largest funding round closed by any tech start-up this year, overtaking edtech decadron Byju’s $800 million fundraise announced in January 2022. Gupta told FE that a chunk of this capital would also be deployed in mergers and acquisitions in the next few quarters.
“We are going to be very prudent with our capital deployment into M&A activity and we would only consider this option if it is proven to raise our tech or revenue capability, or if it increases our total addressable market size (TAM). To date, we have done around 15 acquisitions. And in the future, every dollar that we spend on acquisitions would be primarily based on our profitability targets,” added Gupta.
Dailyhunt’s largest funding round was however closed within just a 4-month timeline, despite private market investors turning more prudent with their portfolios post the pandemic. Umang Bedi, the second co-founder of the company told FE that after the company closed an earlier round worth $450 million in August 2021, the start-up began receiving inbound interest from new investors. Bedi said that Dailyhunt is currently an annual revenue run rate of $128 million, breaking even on an Ebitda level, which in turn attracted potential investors.
In addition, the TAM of the start-up was more alluring to potential VCs and PEs given that it is present in three different markets including social media, news aggregation, and the advertising business. Dailyhunt currently monetises using static and video ads displayed on its mobile app and its web app. Bedi said that a majority of the ads published on its platforms come directly from brands rather than from third-party ad networks that aggregate ad supply from publishers.
“Today (advertising) networks contribute to 2% of our ad revenue, and hence 98% of our ad revenue is direct…Also, around 50% of our ad campaigns come directly from the brand or the publishers. And the rest 50% are performance-based ad campaigns which are possible due to the funnel of user data that we accumulated over the years especially as we scaled to around 350 to 400 advertisers,” added Bedi.
Since its launch back in 2007, Dailyhunt’s parent entity VerSe has raised around $1.5 billion in equity financing, making it one of the most funded content start-ups in the country alongside other competitors such as Sharechat, Chingari, Pratilpi, YourQuote, and others. Currently, VerSe owns and operates three social and content platforms including a TikTok clone named ‘Josh’, news aggregator ‘Dailyhunt’, and hyper-local video platform ‘PublicVibe’. Josh currently claims to have over 150 million MAUs (Monthly Active Users), while Dailyhunt claims to have more than 350 million. Additionally, PublicVibe serves over 5 million MAUs.
VerSe which was originally set up in 2007 by Gupta started as mobile value-added services (VAS) company. It tied up with top telcos to send job classified alerts via text messages. Five years into the business, Gupta and his team decided to pivot immediately from a classified ad company to a news aggregator after acquiring Newshunt (now Dailyhunt) in 2012 to provide regional language news and other content. The pivot was inevitable, since the VAS ecosystem, providing content like ringtones, music and pictures to consumers and sharing revenue per download with telcos, had begun to collapse amid regulatory concerns over the spread of spam and mobile Internet started to take off.
To ramp up its management team, Dailyhunt hired Bedi in February 2018. Bedi was the former managing director (MD) of Facebook India as its president. He had quit Facebook India as MD in October 2017.
Before Bedi’s arrival, Dailyhunt had already started expanding into multiple Indian languages. However, the Dailyhunt app was originally developed by ex-Nokia employees Umesh Kulkarni and Chandrashekhar Sohoni in 2009. Later after the acquisition by VerSe, Dailyhunt ventured into the e-books space on the Android app in four different Indian languages—Hindi, Malayalam, Tamil and Marathi besides English. In 2015, Dailyhunt went through a rebranding exercise that required a major overhaul on both the design and the product front. The new app had a personalised feed, favourite tags, a fresh user interface and support for more Indian languages.
