India’s mobile technology startups are moving in aggressively, drawing investments from an increasing number of overseas investors, including hedge funds and private equity companies.
While FreeCharge, which offers discount coupons as rewards for topping up mobile phone plans and satellite television subscriptions, raised $80 million in fresh funds, NewsHunt, a local language content provider for mobile users, raised 2.5 billion rupees (about $40.5 million). Both the funding announcements were separately announced on Thursday.
New investors in FreeCharge include San Francisco-based hedge fund Valiant Capital Management and Hong Kong-based hedge fund Tybourne Capital Management, the startup said in a press release on Thursday.
The company, a unit of India’s Accelyst Solutions Pvt. Ltd. in Mumbai, had raised $33 million in its second round of venture capital funding in September to improve its service and step up marketing. Fresh funds will be partly used to expand the company’s engineering team and triple its headcount to 600 over the next six months, FreeCharge CEO Alok Goyal told VCCircle.
While India is the world’s third-biggest smartphone market, more than 90 percent of mobile phone subscribers in the country are on prepaid plans. FreeCharge taps into the attraction of getting equal-value discounts on burgers or movie tickets, for instance, for this cost-conscious consumer base, in return for topping up their mobile plans.
FreeCharge has tie-ups with India’s biggest wireless carriers such as Bharti Airtel, Vodafone and Reliance Communications, according to its release.
Similarly, local language content is widely seen as crucial for expanding Internet access in India beyond cities and bigger towns. Google Inc., Facebook Inc. and Microsoft Corp. are investing in boosting local language support for their products and services in India.
NewsHunt says its mobile phone app that provides local language content has seen over 75 million downloads. Users can get news and content in 12 languages and the startup now also offers some 10 million eBooks via the app.
Existing investor Sequoia Capital, which provided Accelyst’s seed fund for FreeCharge and about $4 million in the first round of venture money in 2011, and then led the second round, participated in the latest round as well. Belgian investment firm Sofina SA and Russian technology and ecommerce venture fund ru-Net, which came on board in September, have also invested in the latest round.
Sequoia is also an investor in Verse Innovation Pvt. Ltd., the company behind NewsHunt, having led its second round of funding, alongside early investors.
The latest funding round in NewsHunt was led by New York-based hedge fund Falcon Edge Capital, with Sequoia and existing investors Matrix Partners and Omidyar Network, all putting in more money, the startup said in its release on Thursday.