VerSe Innovation, the Indian content tech unicorn that owns popular platforms like Dailyhunt, Magzter, and Josh, has made yet another significant acquisition. This time, the company has acquired digital marketing firm Valueleaf Group in a cash and equity deal. This move is a strategic one for VerSe as it aims to strengthen its presence in the Indian digital ad space and develop a robust retargeting platform to compete against players like Google and InMobi.
India is experiencing a surge in digital ad spending due to the increasing consumption of online platforms in the country. With a population of over 1.3 billion and being the second-largest smartphone market in the world, India presents immense opportunities for marketers. As a result, digital advertising is expected to capture a 60% market share by the fiscal year 2028, surpassing traditional advertising, according to Redseer.
However, despite the growing demand, India lacks sufficient digital ad platforms to cater to advertisers. Currently, Google is the preferred choice for many businesses, offering its digital ad exchange and consumer destinations like Google Search and YouTube. InMobi is another major player in the market, providing both ad exchange and consumer destinations. Additionally, there are several smaller companies that operate as intermediaries but don’t own consumer destinations.
By acquiring Valueleaf, VerSe is diving deeper into the digital ad market. Valueleaf is headquartered in Bengaluru and serves customers in India, the U.S., and the UAE. The company boasts reputable investors such as CPP Investments, Ontario Teachers Pension Plan, Qatar Investment Authority, and Goldman Sachs. While the financial terms of the acquisition were not disclosed, VerSe’s co-founder Umang Bedi stated that the deal was based on the company’s projected revenue of $100 million and 10% EBITDA for the year.
One of the key benefits of this acquisition is Valueleaf’s strong presence in four core verticals: gaming, online commerce, banking and financial services, and digital-native brands. These verticals account for 80% of all ad spending on performance marketing. By leveraging Valueleaf’s expertise, VerSe will attract businesses looking to purchase digital ads across various platforms.
Valueleaf has targeted ads to over 600 million Indian internet users, representing more than 90% of the country’s internet user base. The company also has access to valuable data, including conversion data from 60-80 million online shoppers and integration with over 50,000 websites, 1,000+ apps, and leading smartphone brands in India. It offers vertical-specific solutions for banking, financial services, insurance, and small and medium businesses.
Before acquiring Valueleaf, VerSe had developed its in-house ad tech stack, which limited the serving of ads exclusively on its platforms. However, with the introduction of NexVerse.ai, a brand-facing platform, VerSe aimed to expand its ad tech reach to external brands. Valueleaf’s acquisition will enhance this offering by adding thousands of supply-side integrations, allowing VerSe to broaden its advertising capabilities.
Valueleaf had previously been acquired by financial markets research company CapitalVia Global Research in 2013. Bedi did not provide specific details about the deal but mentioned that the firm had never raised external capital. In the fiscal year 2023, Valueleaf generated approximately $36 million (nearly 300 crores Indian rupees) in revenue with a 5% EBITDA. Bedi expects substantial revenue growth and an EBITDA of about 6% this year.
This acquisition comes just four months after VerSe acquired Magzter, a digital newsstand platform that competes with Apple News+. VerSe’s annual recurring revenue rate reached $87 million (732 crores Indian rupees) at the end of June. The company’s revenue grew by over 81% to approximately $173 million to $179 million, while its burn rate decreased by 40% to $215 million. This is a significant improvement compared to three years ago when VerSe reported revenue of $95 million to $107 million and a burn rate of $358 million.
In conclusion, VerSe Innovation’s acquisition of Valueleaf Group is a strategic move to strengthen its position in the Indian digital ad market. India’s growing online consumption and smartphone penetration make it a lucrative market for digital advertisers. By expanding its advertising capabilities through this acquisition, VerSe aims to compete against industry giants like Google while catering to businesses’ increasing demand for performance marketing. With its growing revenue and decreased burn rate, VerSe is poised for further success in the digital advertising landscape.
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