Dailyhunt parent VerSe Innovation acquires Valueleaf Group to bolster its ad exchange ambitions

VerSe's acquisition is of Valueleaf Group is expected to accelerate its efforts in building an ad exchange platform for advertisers looking to target consumers in India.

VerSe Innovation, the parent firm of news aggregator Dailyhunt and short video platform Josh, on August 28 said it has picked up a majority stake in Valueleaf Group, a bootstrapped data-driven digital marketing solutions provider.

The acquisition is expected to accelerate the company's efforts in building an ad exchange platform for advertisers looking to target consumers in India.

The move is part of VerSe Innovation's strategy to expand its revenue streams beyond a purely advertising-driven model to include software-as-a-service (SaaS) and digital subscriptions (through Magzter acquisition in April).

Started in 2006 by Satish Saraf and Srikanth Bureddy, Valueleaf Group offers digital growth solutions to advertisers across various categories to help improve their customer acquisition metrics.

Over the past decade and half, the Bengaluru-headquartered firm says it has built a performance data management platform that encompasses over 90 percent of the Indian internet users across all stages of the customer journey along with supply-side integrations across thousands of websites, apps, and millions of smartphones.

Valueleaf Group has also developed industry-focused solutions across different verticals. This includes a referral marketing app Share & Earn, a fintech marketplace Buddy Loan, a communication suite Whistle Messaging and a programmatic advertising platform Whistle Feed among others.

In July, VerSe Innovation launched Nexverse.ai, an ad exchange platform that integrates Supply-Side Platforms (SSPs), Demand-Side Platforms (DSPs), and publishers into a single ecosystem. The platform says that it optimises ad placements and performance through deep learning and predictive analytics to maximum return on investment (ROI) for all stakeholders.

It also provides brands with tools for targeting, optimisation, and analytics, helping them in delivering personalised ad campaigns.

Enhancing full-stack ad solutions

Through this acquisition, VerSe Innovation will integrate Valueleaf Group's performance data across the marketing funnel, supply side integrations, and industry-focused solutions with its advertising tech stack and data management platform with a goal to deliver superior Return On Ad Spends (ROAS) for advertisers.

This move will enhance the firm's retargeting capabilities and full-stack advertising solutions, driving better programmatic performance for advertisers.

VerSe Innovation co-founder Umang Bedi told Moneycontrol this move will help grow the company's revenue and advertiser wallet share while increasing average revenue per user. It will also enable the firm to expand its footprint within the digital advertising ecosystem.

Bedi said the company projects the Nexverse.ai business, along with the acquisition of Valueleaf Group, will generate $100 million in revenue and achieve 10 percent EBITDA margins by the financial year 2025 (FY25).

Path to profitability

VerSe Innovation saw its revenues grow by 57 percent to Rs 1,809 crore in FY23 while its burn rate (expenditure) reduced by 34 percent to Rs 1,448 crore. The firm is yet to report its FY24 financials.

Bedi said the company has achieved a double-digit growth in its topline in FY24, while its burn rate has been reduced by half, without disclosing any specific details.

"We are going to double our revenues in FY25 on account of the two acquisitions, Valueleaf Group and Magzter, and will continue the trajectory of reducing burn by half...By the end of FY25, the company will come very close to break-even" Bedi said.

Bedi said that its flagship news business, which includes the news aggregator Dailyhunt and currently generates the majority of its revenues, has been growing at over 25-30 percent every year for the past two years.

"It has been EBITDA positive, and for the last six months, have been higher double-digit EBITDA positive" Bedi said. Meanwhile, Magzter is currently at single-digit EBITDA positive, he added.

Bedi said Josh is currently the only business where the firm is not profitable. However, he expects that to improve in the future. "This year, about 30-35 percent of the revenues (for Josh) is coming through ads, while about 65-70 percent of the revenues is coming through commerce."

Commerce revenues include revenues from the influencer marketplace VerSe Collab, where the firm provides influencers to brands and take a commission, live streaming where users gift and tip creators, and physical e-commerce business.

Bedi also mentioned that the company is acquisition-hungry, but its criteria are firms that are revenue-generating and are EBITDA-positive. "Our focus for all M&A is going to be revenue and profitability, as well as driving our monetisation efforts" Bedi said.

VerSe Innovation raised a massive $805 million in a funding round led by the Canada Pension Plan and Investment Board and the Ontario Teachers' Pension Plan Board, at a valuation of around $5 billion in April 2022. To date, the company has raised over $2 billion in funding across multiple rounds.