Hike Messenger became India’s newest internet unicorn, the eighth one to be precise, after securing a round of funding at a valuation of $1.4 billion from investors, including Chinese internet giant Tencent Holdings, which owns WeChat messaging app, and Taiwan’s Foxconn Technology Group.
With that, 28-year-old Kavin Bharti Mittal, founder and chief executive officer (CEO) of Hike Messenger - the son of Sunil Bharti Mittal, chairman of Bharti Enterprises - is in the same league as Flipkart’s Sachin Bansal and Binny Bansal (not related to each other) or Snapdeal’s Kunal Bahl and Rohit Bansal, for instance.
Sachin Bansal and Kunal Bahl were among the first to congratulate Mittal Jr on Twitter. Besides Flipkart and Snapdeal, India’s unicorns (companies valued at $1 billion or more) include Paytm, Ola, InMobi, Shopclues and Zomato (where HSBC recently marked down the valuation but investors stayed with the number).
The app, which competes with Facebook-owned WhatsApp, raised $175 million in a fourth round of funding in which existing investors such as Tiger Global, Bharti Enterprises and the SoftBank Group also participated, Kavin said in Delhi.
Also Read: The Kavin Mittal way
Hike’s round was one of the largest in recent months, as investors grow wary of high valuations and focus on profitability over growth. Hike, which till now has raised $250 million, will lean on Tencent’s experience serving content and games to half a billion WeChat users, Kavin said.
Hike, which was launched in December 2012, has said that Hike Messenger has 100 million users, of which 90 per cent are in India. Hike launched its games offering in March. Tencent, too, has a portfolio of games, commerce, content and messaging apps.
“The company will use the funds to make the product better and in improvisation and enhancement to see what Hike would look like in a world where there is no data constraint,” said Kavin at a press conference to announce the fundraising.
Hike integrates news, shopping coupons and gaming and its users send 40 billion messages on the platform each month, Kavin said. The money raised will be used to fund bets on artificial intelligence, machine learning, augmented reality and virtual reality, he told Bloomberg without giving specific plans.
The app gained popularity through a heavy emphasis on localisation. It also comes with privacy features that competitors later sought to copy. For instance, users can hide last-viewed times and status updates, or chat in “hidden mode”. Kavin said 90 per cent of its 100 million-plus users are between 15 and 24 years of age and reside mainly outside India’s biggest cities.
“Ours is a messaging app born for India’s young internet generation, whose need for privacy is even more because in many families, a single device is shared between members,” said the young executive.
The app is available in seven languages and provides stickers in 40 languages. “India is a sight-and-sound market,” Kavin said, adding, “It is a country with dozens of languages where keyboard standardisation is not possible; so, audio and video rule.”
An alliance with China’s largest social media service will prove crucial in the longer term. Hike wants to carve out its own niche in India, much as Tencent’s WeChat has done with China, Line in Japan and KakaoTalk in South Korea, Kavin said. India is already the second largest and the fastest-growing market for messaging services, according to New York-based research consultancy eMarketer.
“India’s internet market resembles China’s more rather than any Western markets,” Mittal said.
Commenting on the investment, Tencent President Martin Lau said: “Hike deeply understands India; a highly diverse market with many nuances. It is on a mission synergistic to ours, which is to enhance the quality of human life through internet services. With our investment, Hike will be able to leverage our deep domain expertise in the messaging platform space to provide more value to its users in India.”
Talking about Foxconn’s investment in Hike, FIH Mobile CEO Calvin Chih said: “Messaging platforms are where consumers and their social networks reside and represent significant investment potential, particularly in a market like India, where most people will access the internet for the first time on their mobile phones.”
“As a leading provider of mobiles technology and Internet of Things solutions, FIH Mobile understands the value that mobile platforms such as Hike Messenger brings to our business portfolio and our strategy for delivering cutting-edge products and solutions that meet the needs of our customers. Hike with its hyperlocal strategy is clearly the company of choice for us to co-invest with our partners, SoftBank and Tencent,” Chih added.
Masayoshi Son, founder, chairman and CEO of SoftBank Group, the longest standing investor in Hike, said: “Hike is one of SoftBank’s best performing portfolio companies in India and we are happy to have stayed invested in it from the beginning. The team has reached an outstanding scale in a short span of 3.5 years. As an investor, we share their vision and are happy that they are moving ahead in their journey so quickly in a competitive environment.”
Hike was backed by many big names in the technology space as angel investors: Adam D’Angelo, founder and CEO, Quora; Aditya Agarwal, vice-president (engineering), Dropbox; Ruchi Sanghvi, former vice-president (operations), Dropbox; and Matt Mullenweg, founder and CEO, Automattic Inc, and co-founder, WordPress.
HIKE MESSENGER: TRACING THE TRAIL
In January 2016, Hike had announced it has a user base of a 100 million users
95% of users are based in India - 90% of them are young and below the age of 30
Hike users exchange 40 billion messages per month and spend 120 minutes/week
Local content - 10,000+ stickers in 40 languages, themes, multilingual user interface
Offers news in English and Hindi, games, cricket and coupons
Offers privacy features that allows you to hide chats, display pictures and status updates
Users can send free SMS when there is no internet or share files without internet