Media-tech startups: Steep valuation causing concerns?

Many media startups laid off employees in the current fiscal. An analysis indicates a huge gap between their valuation and revenues

e4m by Kanchan Srivastava
Published: Apr 3, 2023 9:04 AM  | 8 min read

At the beginning of January when the world was still celebrating the new year, hundreds of employees of Mohalla Tech, which runs the social media platform ShareChat and short video platform Moj, stared at an uncertain future. The company had laid off around 20% of its workforce. Some key executives also parted ways later. The Bengaluru-based company also shut down its fantasy sports platform Jeet11 (revenue Rs 14 crore) in December 2022 and terminated the services of around 100 employees. The company blamed the fiasco on “external macro factors” which allegedly impacted the availability of capital. The sudden layoffs by such a big player shocked the industry. After all, only a few months ago, ShareChat had raised $520 million (approx Rs 4,250 crore) from Google,

Times Group and existing investors at a valuation of $5 billion (approx Rs 41,000 crore), as per the company’s own announcement in June 2022. Meanwhile, it acquired a short video app MX TakaTak as well.

The company’s valuation stands 117-fold of its operating revenue, which was Rs 350 crore in 2022, as per its consolidated financials procured from Tofler. It posted a whopping Rs 3,000 crore of losses in the same year. 

Similar was the case of VerSe Innovation, which operates news aggregator Dailyhunt and short video app Josh. It laid off 5% of its 3,000-strong workforce in November 2022 following a “mid-year performance review to cut costs and streamline operations”. The company had raised $805 million (approx Rs 6,600 crore) in April 2022 from Canada Pension Plan Investment Funds, projecting its valuation at $5 billion (approx Rs 41,000 crore). This was when its revenue was Rs 964 Cr and losses amounted to Rs 2,460 cr in FY22. 

Microblogging site Koo, which positioned itself as the Indian alternative of Twitter, laid off 5 percent of its employees last September just before entering into the second round of funding. The Bengaluru-based company was reportedly valued at $275 million (approx Rs 2,250 crore) after receiving $6 million (approx Rs 490 crore) in the second funding round in November 2022. 

Its operating revenue in FY22 was barely Rs 14 lakh, better than the previous year’s Rs 8 lakh, but losses mounted 5.6-fold within a year. Importantly, the company’s expenses were in the range of Rs 202 crore, of which two-third were the marketing and promotional expenses, as per Entracker data. 

Valuation hype

Over the past decade, Indians have celebrated the success of homegrown startups with multi-billion dollar valuations. However, lately, the steep valuations of those startups are becoming a cause for concern. Such is the crisis that many startup founders fear running out of funds after investors cautioned about the funding winter last year. 

The series of valuation fiasco also raises a big question mark over the valuation hype in the media sector, an issue that has been simmering for long but remained under carpet as stakeholders are not willing to speak on record. 

Are such valuations sustainable?

Industry leaders wonder whether hefty valuations of startups are sustainable. 

Calling this a usual market correction that the investment cycle goes through every few years, Harish Tibrewala, Joint CEO, Mirum India, noted, “When there is a new opportunity, everyone rushes in to get a piece of the pie and valuation numbers are not really linked to growth or profit. Tell a good story and chance is someone is willing to invest money. Once saturation comes in, the market starts looking at hard numbers: revenue/growth/profitability. And obviously in most cases the valuation tumbles. A solid business which either has a road map for profitability or has an IP that can get acquired, continues to remain in the game. The rest eventually fall out.”

Ashish Bhasin, Co- Founder and Chairman of RD&X Network, feels marketing strategy of startups coupled with global economic situation have led to this crisis. 

“Besides the controversial financial strategy of startups, a combination of macroeconomic factors, such as the global economic constraints and the Russia-Ukraine war, reduced capital flow globally which is bringing a sense of rationality to startup valuations,” says Bhasin. 

Bhasin, however, insists that high valuation by startups is not an aberration and technology companies often have to project high valuation. “Tech companies have to spend upfront to build the product based on which they project growth and their valuation. Things usually move as per plan until markets hit roadblocks.”

Karan Taurani of Elara Capital echoes the sentiments. “There is nothing wrong with the steep valuation of startups which are in the growth phase. Sometimes their growth stagnates for reasons beyond their control.”

Given the fluid situation, how much devaluation is likely for such startups in the next fiscal? Tibrewala opines, “I don’t know their business well enough. But a $5bn valuation for a business with $50 mn in revenue and $500 mn in losses just does not seem sustainable.”

Valuation figures are meaningless until the company goes for another round of funding, says a highly placed media executive. “Valuation is significant only for funding rounds. Fund seekers often project their future growth in anticipation to continue their momentum and a good business environment. However, things often may go awry. In such a scenario, companies either quote a lower valuation in the next funding round, or else investors themselves cut them down,” he said. 

ShareChat’s response

A company spokesperson stated, “Since our launch eight years ago, ShareChat and our short video app Moj have seen incredible growth. However, even as we continue to keep growing, there have been several external macro factors that impact the cost and availability of capital. Keeping these factors in mind, we needed to prepare the company to sustain through these headwinds.” 

“Therefore, we had to take some of the most difficult and painful decisions in our history as a company and had to let go of around 25% of our incredibly talented employees who were with us in this startup journey. This included Jeet 11, which was a separate business unit. The layoffs affected employees across the spectrum,” he added. 

“As capital became expensive, companies needed to prioritize their bets and invest in the highest-impact projects only. Over the last few months, we had aggressively optimized costs across the board, including in marketing and infrastructure, among other cost heads and ramped up our monetisation efforts. The decision to reduce employee costs was taken after much deliberation and in light of the growing market consensus that investment sentiments will remain very cautious throughout this year. At the same time, we are doubling down on our efforts behind advertising and live-streaming revenues. With these changes, we aim to sail through the uncertain global economic conditions over 2023 and 2024 and come out stronger,” the spokesperson said. 

Koo’s response 

Defending its position, a Koo spokesperson stated, “Like most startups, Koo also built in a workforce to account for spikes. Given the current market environment and external realities of a global slowdown, we get affected too. Some of the most profitable companies in the world have shed tens of thousands of jobs. We are a young startup with a long way ahead of us. While we are well capitalized, it’s important for businesses of all sizes to adopt efficient and conservative approaches to see this period through.”

“In line with this, we have made some roles across certain teams redundant over the course of the year and have supported them through compensation packages, extended health benefits and outplacement services. As history has proven, there will be better times for all of us collectively and we are most positive about what we are building for the world and what Koo means for India’s foray in the world of social media,” the spokesperson said, without sharing the number of sacked employees. 

“The revenue figure you have stated is for FY22 before we began our monetization efforts and is income from non-operational activities. Koo started its monetization experiments in September 2022 and within 6 months we had one of the highest ARPU per DAU compared to Indian social media companies. We have over 100+ brands advertising on the platform today and we will continue to experiment with monetization as we look to build a sustainable business.”

VerSe Innovation silent

Verse Innovation chose not to respond. At the time of layoffs last November, Umang Bedi, co-founder was quoted as saying “Given the current economic climate, like other businesses, we’ve evaluated our strategic priorities. Considering the long-term viability of the business and our people, we have taken steps to implement our regular bi-annual performance management cycle and made performance & business considerations to streamline our costs and our teams. This has impacted 5% of our 3,000-strong workforce.”


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I welcome anyone using 'Humans of...' concept: Brandon Stanton, HoNY

Stanton was responding to a query by The Washington Post about the lawsuit filed by Humans of Bombay against the People of India

By e4m Staff | Sep 26, 2023 1:05 PM   |   2 min read

brandon stanton

The lawsuit filed against Humans of Bombay (HoB) against the People of India (PoI) has opened a new can of worms for the former with even big international publications covering the news. In his recent salvo against the Mumbai-based photoblog, Humans of New York founder Brandon Stanton has released his statement regarding the monetisation of his platform.
The comment was in response to a query by the Washington Post regarding the HoB lawsuit.

Stanton claimed that in the last 13 years, HoNY was operational, he never received a penny for a single story he has put out. He also emphasised that his income mainly came from proceeds from his book sales, speeches he has given and Patreon.

Here's the full text of his comment.

Stanton's statement comes at a time when HoB is being criticised for monetising the content on the photoblog.

HoB was in the news for filing a lawsuit against People of India (PoI) for copyright infringement. According to the plaintiff, PoI copied HoB's storytelling format, which showcases human interest stories centred on photographs of ordinary people. The plea also mentioned that PoI lifted films from HoB's Instagram account without seeking permission first.

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Marketing Data Platforms: The new powerful tool to track customer preferences

MDPs bring together data from owned, earned and paid channels, allowing brands to forge a unified & comprehensive view of their marketing landscape

By Shantanu David | Sep 26, 2023 8:45 AM   |   4 min read


CDPs, CRMs, CPMs, CTRs. No one can accuse martech stacks with lacking acronyms for various tools and metrics, and that was just some of the Cs. Today, we are delving into yet another acronymous technology which, though doesn’t begin with C, but is being viewed as indispensable in helping marketers track and attract the all-important Customer.    

“Marketing Data Platforms (MDPs) are emerging as powerful tools that complement Customer Data Platforms (CDPs), Customer Relationship Management (CRM) systems, and other data tools in the marketing ecosystem. MDPs help organizations centralize and leverage their data for more targeted, effective, and data-driven marketing strategies,” reveals Gopa Menon, Head of Digital – Mindshare South Asia.

Abhimanyu Vyas, Business Head of Havas’s MarTech arm, PivotConsult, says that Marketing Data Platforms serve as a central hub for brands to seamlessly consolidate data from various sources, including advertising, analytics, and transactional sources.

“They bring together data from owned, earned, and paid channels, allowing brands to forge a unified, comprehensive view of their marketing landscape. This consolidated data serves as a valuable resource for generating marketing insights, refining campaign strategies and product offerings, making informed pricing decisions, enhancing user experiences, and constructing finely tuned audience segments,” he says.

Marketing Data Platforms complement existing tools like Customer Data Platforms (CDPs) and Customer Relationship Management systems (CRMs), facilitating agile measurement and analysis of activations conducted through these systems. Clients are also using advanced cases like Marketing Mix Modelling, Anomaly detection and Uplift Modelling.

Menon agrees that there are multiple use cases for MDPs, ranging from 360-degree customer view; segmentation and targeting; personalization; marketing automation; attribution and analytics; content management; cross-channel integration; compliance and data governance; predictive analytics; and customer retention and loyalty.

Indeed, as Bharatesh Salian, Sr. Vice President – Marketing Science and CX, FCB/SIX India, points out, “In today’s evolving and commoditised world, customer experience becomes a deal maker or breaker for more than 80% of the purchase decisions. Hence it becomes very important to map the behavioural data of prospect consumers to identify the right moment of truth when brands can engage and drive the right stimuli to take the action as part of an orchestrated consumer journey.”

“While CDPs or CRM provide the single golden record of the consumer along with their purchase patterns and preferences, the MDPs provide the insights into the behaviour of the users to click on the purchase now button. The ability of the marketing platforms to create data sets and classifications based on propensity to purchase by building on the lookalike audiences also helps tremendously in optimising spends,” adds Salian.

That being said, Paras Mehta, Business Head, Matterkind India, which operates under the IPG Brand says that while Marketing Data Platforms are emerging as valuable complements to existing tools such as CDPs and CRMs, “Their full potential is yet to be fully harnessed. The key challenge lies in the need for a substantial volume of consented data, which is currently a work in progress, mainly due to the presence of multiple walled gardens and limited access to personally identifiable information (PII) datasets.”

“In my perspective, an ideal use case for these platforms would involve three critical steps: firstly, at the advertiser level, establishing a Universal ID that encompasses all actual and potential consumers; secondly, leveraging this Universal ID to orchestrate and control communication and frequency across all marketing channels; and thirdly, utilizing the insights derived from these platforms to further optimize media and communications strategies,” says Mehta.

Menon concludes, “In today’s data-driven world, Marketing Data Platforms enhance the capabilities of CDPs, CRMs, and other data tools by providing a centralized hub for data management, analytics, and marketing automation. They empower marketers to create more personalized, data-driven, and effective marketing strategies, ultimately leading to improved customer experiences and business outcomes.”


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NCLAT: Google case appeal to be heard from November 28

The search giant has been fined Rs 936 crore for taking unfair advantage of its dominant position in the app store ecosystem

By e4m Staff | Sep 25, 2023 6:07 PM   |   1 min read


In the latest development on what has become a long and consequential standoff, the National Company Law Appellate Tribunal (NCLAT) today announced that it will start hearing Google's appeal against an order by the Competition Commission of India (CCI) that had imposed a Rs 936 crore penalty from November 28. The CCI has imposed the fine on the internet ubiquity for taking unfair advantage of its dominant position in the app store ecosystem.

In October of last year, CCI had charged Google with restricting app developers from using any type of third-party billing or payment processing services to purchase apps for in-app billing on Google Play Store, the globally available app platform developed and maintained by the company. 

In January of 2023, NCLAT denied immediate relief to Google against CCI’s order. Google also filed an appeal at the Supreme Court against the NCLAT order, though it ultimately withdrew the case.

NCLAT has now said that the litigating apsp should file responses to Google’s appeal in four weeks.

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e4m WhatsApp Channel launched

Follow our channel for the latest updates in the world of media, advertising and marketing and experience news like never before!

By e4m Staff | Sep 25, 2023 3:57 PM   |   1 min read


In today's fast-paced world, staying informed about the latest trends is of paramount importance. With that in mind, the exchange4media Group has unveiled its WhatsApp Channel - a gateway to real-time updates and insights, curated to keep you informed about industry trends in real-time.

You can now receive all the updates from the advertising, marketing, and media industry, breaking news, insightful articles and in-depth features on key trending topics directly on your WhatsApp, ensuring you're never out of the loop.

Subscribing to our WhatsApp Channel is easy. You can follow the steps below and join our channel to start receiving updates immediately.

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By subscribing to e4m’s WhatsApp Channel, you gain exclusive access to the most up-to-date information across a wide range of topics and experience news in its most dynamic form.

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Zone Media partners with VDO.AI to expand in India & SEA

The collaboration will allow Zone Media to gain exclusive access to VDO.AI’s innovative advertising tools

By e4m Staff | Sep 25, 2023 11:17 AM   |   2 min read

Zone Media

Zone Media has entered a partnership with ad-tech tool VDO.AI. This collaboration will enable Zone Media to provide clients in India and Southeast Asia with video advertising solutions that drive highly effective results.

As an official partner of VDO.AI, Zone Media will gain exclusive access to their platform and innovative advertising tools. This partnership will further strengthen Zone Media's ability to deliver exceptional digital marketing campaigns and drive significant business growth for their clients. By combining VDO.AI's cutting-edge technology with Zone Media's extensive expertise in the digital marketing landscape, the partnership aims to revolutionize the way brands connect with their audiences through video advertising.
Arjit Sachdeva, Co-founder, VDO.AI, shared their perspective on this partnership: " We are thrilled to announce our partnership with Zone Media, With Zone Media's regional insights and VDO.AI's capabilities, we look forward to helping brands in India and Southeast Asia achieve their marketing goals through highly targeted and engaging video campaigns. Together, we aim to set new standards in the digital advertising landscape and provide brands with the tools they need to succeed."

"We are excited about joining hands with VDO.AI" said Sumit Gupta, CEO of Zone Media. "This collaboration allows us to provide our clients with industry-leading video advertising solutions that are tailored to their specific needs. VDO.AI's advanced creative solutions, coupled with our strategic digital marketing expertise, will enable us to deliver outstanding results and drive exceptional brand experiences for our clients in India and Southeast Asia."

Mrityunjay Kumar, President, Zone Media, said with Zone Media's deep understanding of the local market and VDO.AI's robust video advertising capabilities, brands in India and Southeast Asia can now benefit from highly targeted and engaging video campaigns that deliver maximum impact. The partnership promises to unlock new possibilities for businesses seeking to enhance their digital presence and accelerate growth.

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PhonePe launches Indus AppStore, challenges Google’s monopoly

The store promises zero platform fees and no commission on in-app purchases as opposed to Google, which levies 15-30%

By e4m Staff | Sep 25, 2023 9:07 AM   |   2 min read

indus appstore

In a bid to challenge Google's monopoly, PhonePe has launched “Indus AppStore” promising zero platform fees and no commission on in-app purchases. 

“Developers can commence the process of registering and uploading their applications with immediate effect,” the company officials announced in Bengaluru on Saturday.

They also said the app listings on the platform will be free for the first year, following which a "nominal" annual fee will be charged.

The Walmart-backed fintech firm PhonePe projects its app store as the first such 'made-in-India' platform. PhonePe acquired IndusOS in 2021 and has since been working on the app store. 

The Indus app store will offer support for third-party payment providers, compatibility with 12 Indian languages, and a streamlined login system centred around phone numbers.

It is noteworthy that Google charges a 15-30% commission on in-app purchases. 

Speaking of the launch, Akash Dongre, CPO & Co-Founder, Indus Appstore said, “India is poised to have over 1 billion smartphone users by 2026 offering us a massive opportunity to build a new-age, localized Android app store. Despite being such a large consumer market, app developers have always been forced to work with only one app store - Google Playstore - for distributing their apps. Indus Appstore hopes to provide app developers a credible alternative to the Google Playstore - one that is more localized and offers better app discovery and consumer engagement. We are excited to open up the Indus Appstore Developer Platform today, and invite all developers to list their app on the Made-in-India app store.”

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After Netflix, Prime Video enters ad race

Ads will first be introduced on Prime Video content in the US, UK, Germany and Canada, in early 2024

By e4m Staff | Sep 22, 2023 5:26 PM   |   1 min read

Prime video
Amazon has announced that it will introduce ads in its Prime Video streaming service in 2024. The ads, the e-commerce giant said, "will allow it to continue investing in compelling content.” 
According to a press release from Amazon, the ads will first be introduced on Prime Video content in the US, UK, Germany, and Canada, with France, Italy, Spain, Mexico, and Australia to follow later that year.”
The date for the introduction of the ads is not specified, with the release just stating it to be in “early 2024”. 
In the release, Amazon has said it doesn’t have plans to change the current price of its Prime memberships in 2024, and Prime members will be notified of the change several weeks before the ad injections begin, along with details to sign up for the ad-free option.
"To continue investing in compelling content and keep increasing that investment over a long period of time, starting in 2024, Prime Video shows and movies will include limited advertisements in the UK," Amazon said.
Amazon’s decision to introduce ads follows similar steps taken by by rivals including Disney+ and Netflix.

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