Morning Markets: Over the weekend news aggregator SmartNews announced a fresh round at a high valuation. Let’s examine reaction to the news and the company’s market.
SmartNews, a self-described “news app” that claims 500 percent userbase growth in the United States over the past year, has raised a fresh round of capital. The new $28 million Series E values the firm at $1.1 billion, it announced. SmartNews previously raised a $38 million Series D led by the Development Bank of Japan and a $10 million Series C led by GREE.
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The Tokyo-based company has raised just over $116 million since it was born in 2012. SmartNews stated in a release that it has 20 million monthly active users, or MAUs, in the United States and Japan.1 In June it was reported that SmartNews had 15 million DAUs.
Here’s a look at the company’s fundraising history:
The news that SmartNews had raised a nice chunk of new money received normal coverage from the technology and business press (here’s TechCrunch and Bloomberg). It also picked up a little doubt. Rafat Ali, the former founder of paidContent, a publication focused on the economics of media before selling in 2012, weighed in as well.
In a tweet Ali said the following:
Hasn’t everyone learned this lesson already, chasing unicorn status for media startups is likely the kiss of death? Of what use is putting that giant target on your back, when the buyers are scarce?
His argument is twofold. First, that this sort of fundraise tells other companies that the SmartNews market is lucrative, possibly leading to competition or a squeeze from platforms. And, second, that it’s hard to exit a media company at such a high price.
Both criticisms are valid. Media-focused startups haven’t had a great run in America in recent quarters. However, the landscape abroad looks a bit different.
Aggregation For Fun And Profit
Media-focused upstarts have a bad rap in America. With the implosion of Mic, the fire-sale of Mashable, the birth-death of News Gawker, and staffing cuts as far as you can can see, it’s difficult to be optimistic about the future of media and news-centered startups domestically.
But the local market is not the global market. Outside of this country’s borders, there’s reason for optimism regarding media apps and news aggregators in particular.
Two examples come to mind. First, China-based Qutoutiao, a Tencent-backed news aggregation app that TechCrunch called the “number two mobile content aggregator” in that country. It went public last year, and despite shedding most of its value while public, is still worth over $1 billion. (Crunchbase News coverage of the company’s financials here.)
And second, Jinri Toutiao. Part of the ByteDance empire in China, Jinri Toutiao is worth about $20 billion after a $2 billion 2017 round. ByteDance, Toutiao’s parent company, is best known in the United States for the success of its TikTok social application. General Atlantic led the $2 billion investment.
While China-based apps seem to have the highest valuations (read up on the Chinese podcast market as well for more on the country’s domestic media market), it’s not impossible to imagine the model (and, therefore, the success) working again. Perhaps SmartNews can pull it off.
Illustration: Dom Guzman
Crunchbase News recently joined the SmartNews platform. We would have covered this round regardless but felt that the fact bore mentioning.↩