Towards the end of last year it came in two tranches. Reports speculated that it was a down round — that is, when a company raises capital on a valuation lower than the previous round. A month later, the second part of the fund-raise landed and it was not. Roposo, the regional language social network, had raised money almost 18 months after it first pivoted from a social commerce app to a social networking platform. The investors, Tiger Global and Bertelsmann, together put in around $11 million.
Roposo in the grand scheme of things is not a big player. It has raised almost $31 million since it was founded in 2014. It faces off against bigger players in ShareChat, which in September 2018 raised $100 million, valuing itself at almost $500 million. There are others too. Hike announced last year, as it laid off 25 per cent of its staff, that it would be pivoting away from the messenger and now becoming a social app. In a recent blog post, Hike founder Kavin Mittal said he would be divorcing the messenger part of the app from the social app. Sources say all the remaining funds will be diverted to the social app. But this could also be the start of the race.
Since Roposo’s investment came in over a year after it pivoted, it can be safely assumed that both Tiger Global and Bertelsmann believed in the pivot and hence followed on. So, we potentially have three well-funded Indian companies
vying for the customer’s attention and there are more. Clip App, which is backed by India Quotient and Matrix Partners, and there are also the Chinese, which include Helo and Tik Tok (both part of the Bytedance family).
Roposo’s started as a gifting website, then it realised that with fashion it could get the stickiest of all customers: women. It then pivoted to a social commerce platform. Roposo encouraged customers to create a feed of their favourite clothes across e-commerce websites, encouraged customers to pair their clothes with different accessories and create a look. It also got customers deals on styles. “We essentially behaved like an affiliate,” says Mayank Bhangadia, co-founder and CEO, Roposo. Affiliates are companies
that make a commission on bringing customers to e-commerce websites. The feed developed and so did Roposo. From just pictures, customers started posting small videos. Then things changed. As fashion e-commerce sites went, there was a definite consolidation. The use case for affiliates was fading. Roposo could either start private labels or do something different. In 2017, Roposo had evolved to a version of Pinterest meets Instagram, meeting affiliate sales. But then a new path opened. “People started posting short videos of not just fashion but also food and travel,” says Bhangadia. And that’s when something clicked — it could pivot and monetise this part of the business.
Today, the company has 1.6 million active users a day. Customers spend an average of 29 minutes a day on the app. It isn’t the levels of ShareChat, which is at around 10 million active users a day. But it is getting there, Bhangadia believes. “Roposo wants to replicate the TV experience,” he adds. And in chasing that the company has over 25 channels in different languages across genres.
But the fact remains that the sector is crowded with everyone focusing on video. What’s brought on this gold rush? Bhangadia credits this to the emergence of Jio. “When Jio came two things got popular in India: WhatsApp and YouTube,” says a former Google India employee who now works at one of the Indian unicorns. He explains that people who never had access to the internet found a brand new way of passing time. “And for this group, internet was an elitist concept,” he adds.
A Delhi-based venture investor describes the exuberance perfectly. “Technology companies
say they have the 1.3 billion potential customers. Let’s burst that myth first,” he says. You can remove 600 million people from the 1.3 billion who are too poor to be included in any of this. Their primary objective is to put food on the table and roof over their heads. Now, you have 700 million people. “The top 100 million of this are those who are super users in India,” he adds. They order on Amazon, use Swiggy and book flights on MakeMyTrip. There is a layer of 100 million right under this who are on Facebook, Twitter, use Flipkart but their most high-value online transaction is IRCTC. That leaves 500 million people, those who have smartphones but only use WhatsApp. They stand in queue to buy train tickets. They don’t like Facebook or Instagram, English makes them uncomfortable and prefer video to text.
There are roughly 500 million people in this group. They don’t like Facebook and Instagram, as English makes them uncomfortable and prefer video to text. This 500 million are people who have nothing built for them. And that’s why the likes of ShareChat and Roposo have caught so much traction. It is easy, bite-sized entertainment, which can handle low speeds and the standard of content is much lower.
“It is not a short-term play,” says a Mumbai-based PE investor who is aware of Roposo’s plans. He explains that step one in all video sites will be to create stars. Roposo and ShareChat both have their own ad network where everything from phones to apparel is advertised. Roposo has a small layer where it enables e-commerce. But once all this is built, then what?
The answer is Facebook or Google. Facebook has been trying to break into the next level of Indian customers, a data stream that is invaluable for it to sell ads to but it hasn’t been able to get past that layer. Google has been trying to build a social network for years and has found no success. A version of ShareChat or Roposo is ripe for acquisition. “If either of these two execute properly, you will see companies pay good money for them,” says the PE investor. But there are so many in the business now, it is difficult to see how consolidation will play out in a few years.