India's VerSe buys Valueleaf to boost digital marketing

VerSe Innovation -- India's media technology unicorn that owns local language news aggregator Dailyhunt, digital newsstand platform Magzter and short-video app Josh -- has made an acquisition to square up to the likes of Google and InMobi in the area of digital marketing. It has scooped up Valueleaf Group, a big player in Indian digital advertising that claims to reach up to 500 million mobile devices.

VerSe has not disclosed the value of the deal, describing it as a cash and shares acquisition. Nor is it clear who, exactly, is selling Valueleaf to VerSe and whether this is a majority or full acquisition.

In 2013, Valueleaf was acquired by market research firm CapitalVia but little has been mentioned about its ownership since then. VerSe co-founder Umang Bedi declined to share specific details on that deal but said Valueleaf had never raised external capital.

We are following up with the company to ask for more details and will update this post as we learn more.

VerSe for its part is backed by CPP Investments, Ontario Teachers' Pension Plan, Qatar Investment Authority and Goldman Sachs and in 2022 was valued at around $5 billion. Both companies are headquartered in Bengaluru.

The deal is significant because it positions VerSe as a competitor to Google and InMobi.

India is the world's most populous country, and one of the most digitally attuned, with more than 50% of its population using the internet and with the biggest number of smartphone users after China. As a result, digital ad spend in India is growing as consumption across online platforms expands. Digital advertising in the country will outpace traditional advertising by capturing a 60% share by the financial year 2028, according to market consultancy firm Redseer. The digital ad market globally is also moving toward programmatic performance marketing, as it allows better dollar value to advertisers.

Google has so far been the first choice for many businesses; the search giant offers its digital ad exchange alongside consumer destinations, including Google Search and YouTube. InMobi, a significant homegrown player, offers both ad exchange and consumer destinations. There is also a long tail of smaller companies that don't own consumer destinations but work with third-party platforms.

Now VerSe, as a content platform owner itself, will be getting deeper into the ad market, cutting out working with third parties who have captured those revenues in the past and moving into a wider range of platforms where those ads might be served.

"What we found with Valueleaf is that they were very strong in four core verticals: gaming, online commerce, banking and financial services, and digital-native brands, which are largely the four verticals that spend 80% of all their ad dollars on performance marketing," Bedi said. "That was an added benefit that came to the table." In addition to India, Valueleaf also serves customers in the U.S. and UAE.

Valueleaf claims to target ads to more than 90% of Indian internet users, or over half a billion people. It also claims to have conversion data on between 60 million and 80 million online shoppers, and it says it's served between 200 million and 300 million app install ads, Bedi said.

It has integrated with over 50,000 websites, 1,000-plus apps and all leading smartphone brands in the country. It offers vertical-specific solutions aimed at banking, financial services and insurance, as well as small and medium businesses.

Before Valueleaf, VerSe developed an in-house ad tech stack, which restricted serving ads specifically on its platforms, including Dailyhunt and Josh. It also introduced a brand-facing platform called NexVerse.ai in May to expand its ad tech platform to external brands. Valueleaf will help broaden that offering by adding thousands of supply-side integrations, Bedi said. (It also seemingly worked with third parties like Google: It's not clear if those relationships will stay intact now. We are asking.)

In the financial year 2023, Valueleaf generated about $36 million (nearly 300 crores Indian rupees) in revenue at 5% EBITDA, Bedi told TechCrunch, adding that the firm is on its way to market a "very significant revenue growth" and EBITDA of about 6% this year. He also stated that Valueleaf exited its June month at an annual recurring revenue rate of $87 million (732 crores Indian rupees).

The latest acquisition comes just four months after VerSe acquired Apple News+ competitor Magzter.

VerSe's revenue grew by 57% to $130 million in the financial year 2023, with its burn reduced by 34% to $172 million from $261 million in 2022. Without disclosing the latest numbers, Bedi said the startup saw a "massive double-digit growth on the top line, and burn has come down more than half to triple-digit crores" last year.