Regional language news and content aggregator Dailyhunt is in talks to raise about $100 million, seeking a valuation of $1.2 billion as it looks to cash in on the big jump in online content consumption following the coronavirus outbreak, sources said.
The round is likely to be led by existing investor US-based Falcon Edge Capital that recently raised $300-million India-focused fund, sources said. The deal could make the Bengaluru-based company India’s newest unicorn, a privately held firm valued at a billion dollars or more.
“The deal has not closed yet, but it should get done given their traction and because no one has been able to compete with them at the same scale. The valuation, however, is a bit aggressive,” said a person close to the talks on condition of anonymity.
Dailyhunt was valued at $625 million when it raised $36 million from James Murdoch’s Lupa India in May, Entrackr reported.
Dailyhunt did not respond to Moneycontrol’s email while Falcon Edge declined to comment.
Run by Verse Innovation Pvt. Ltd, Dailyhunt aggregates content from newspapers and websites and is available in 13 languages, including Marathi, Gujarati, Tamil and Bhojpuri.
It also offers original video content in Hindi and Telugu and a free live television streaming service in nine languages through strategic partnerships.
One of the earliest entrants in the regional content aggregation space, Dailyhunt, previously known as Newshunt, was founded by ex-Nokia employees Umesh Kulkarni and Chandrashekhar Sohoni in 2009.
Three years later, Virendra Gupta acquired the company and is now the chief executive. Former Facebook India head, Umang Bedi, joined the news aggregator in February 2018.
Dailyhunt has been looking to raise a large round of funding for more than a year now. In the last couple of years, it raised between $20-50 million from Goldman Sachs, Sofina, Lupa India and Stonebridge Capital.
Like most content startups, Dailyhunt makes money by serving ads, a business model largely seen as unsustainable because the online advertising market is cornered by Google and Facebook, whose personalisation algorithms are generally better.
Dailyhunt users can create an account and select their preferred news outlets that helps in personalising their feeds, similar to China’s TikTok, Douyin and Toutiao, which is China’s largest online news aggregator. It has a “For You” section on its app, a design choice similar to the Chinese apps.
As India-China ties plunge to their lowest in 50 years and Chinese investments face increased scrutiny, banned TikTok’s parent ByteDance is a minority shareholder in Dailyhunt, where it led a $25 million round in 2016.
TikTok and 58 other Chinese apps were banned by India a few days after 20 Indian soldiers were killed in a clash with the troops of the neighbouring country in Ladakh’s Galwan Valley on June 14.
Indian content startups, in news or social media space, have found monetisation challenging, though sources say Dailyhunt has a revenue of about $50 million, an exception in the space.
Regional language platforms such as ShareChat and Pratilipi, have, so far, not been able to monetise beyond a few million dollars despite a sizable user base.
Another news aggregator, InShorts, backed by Tiger Global Management, also wants to make a dent in the space.
“Dailyhunt and others with regional content as a focus have a non-English speaking, non-metro core audience, whose purchasing power is relatively low. It is a segment online advertisers have been wary of so far because it is difficult to make money from these users,” said an investor in the space, requesting anonymity.
Dailyhunt, however, stands to gain in the long run from the pandemic, which has dealt a big blow to revenues of the already struggling newspaper industry and driven up digital news consumption.
In the initial months of the pandemic, lower ad spends online hit digital media platforms but in the long term, they stand to benefit.
Dailyhunt has also faced headwinds on the regulatory front. The government said in August last year that foreign direct investment in digital media firms should not exceed 26 percent but has since not clarified or enforced the rule.
Dailyhunt’s investors are all foreign, including venture capital firms Sequoia Capital, Goldman Sachs, Sofina and ByteDance.
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