Affle Raises Over Rs 50Cr From D2 Communications

Singapore-headquartered mobile media start-up Affle has raised over Rs 50 crore in its second round of funding from existing investor D2 Communications Inc., a joint venture between Japanese telco NTT DoCoMo Inc. and ad agency Dentsu.

The deal is an all-cash investment for a minority stake in Affle Holdings Pte Ltd, through acquisition of both newly issued and transferred existing shares in the start-up.

Techcircle.in had earlier reported the company's intention to raise a fresh round of investment from existing and new investors. Affle CEO Anuj Kumar had told us that the funds would be used for expansion and acquisition was not a priority.

D2 Communications invested in Affle in February this year, a 'token investment' as a part of a strategic alliance. "The deal amount was not significant. It was the intent that both parties will work together and today we are giving it a full shape," Anuj Khanna Sohum, chairman of Affle, told Techcircle.in.

Affle has raised a total of $20 million in funding so far and is backed by Microsoft Global Finance, Itochu Corporation, Bennett, Coleman & Co. Ltd (BCCL) and Centurion Private Equity. The previous round was $5 million from Microsoft in end-2008. With this round, D2C's stake is greater than that Microsoft's stake in Affle. D2C has said in a separate statement that with this funding, it will become the largest shareholder in Affle and that its CEO Takayuki Hoshuyama will be serving part time on Affle's board.

This round of funding is the growth capital for the start-up. "Affle is making money. Our formula of growing the company is to align with a stronger partner who invests and gets more skin into the game," said Sohum.

Expansion

The new funds will be used for consolidating product development efforts and further strengthening Affle's business in the existing Asian markets and setting up operations in new markets. Western Europe, Australia and the USA are the next target markets for Affle, Kumar had told Techcircle.in in an earlier interview. But this is the second priority for the start-up. The first is establishing dominance across Asia. "Even though Asian countries are smaller dollar contributors, we believe they will see significant growth over the next five to 10 years. Asia will be a dominant economy soon and we have made huge investments in R&D and products, as well as physical operational expansion, in the South-East Asia," detailed Sohum. Affle is looking to seize opportunities in Thailand, Malaysia, China and Japan, with help from partners.

So far, Affle's largest investments have been in India and Indonesia where it has aggressively grown its sales teams. In India, the company engaged with top telcos Bharti Airtel, Idea Cellular, Reliance Communications and Tata DoCoMo, who promote and market Affle's apps to mobile subscribers. The firm is already profitable in its two key markets, India and Indonesia, as of the fiscal ended March 2011. In Indonesia, it has partnered with top operator Telkomsel. Affle has worked with ad agencies such as Group M, OMD and Madison Communications.

Products

The firm recently combined two apps – SMS2.0, a text messaging tool that offers customisation of your inbox and messages, and SMSLive – under the SMS2.0 brand. It also offers Pinch, an instant messenger app, and plans to introduce more apps in the sports category, after launching Cricket Maharathi (a mobile app for cricket rating) and mobile magazine Dressing Room.

Pinch IM was the first of Affle's apps to be launched globally with an upgrade in August 2011.  The company will continue to develop products for the mobile messaging sector. "The common denominator in the ever-changing mobile landscape is messaging. Nobody owns mobile messaging yet. We will continue to innovate in this space until we crack it," said Sohum.

Affle is also planning to launch location-based services and transaction services in the near future as it seeks to build its portfolio and monetise them via ads. "Our direction is to ensure user engagement through apps and services, and create advertisement opportunities that will lead to transactions," he added.

Top Management & Board Members

In May this year, the start-up announced its top brass:  founder Anuj Khanna Sohum became the chairman and Anuj Kumar, the CEO. Interestingly, none of Affle's investors is on its board. It has four independent directors – ex-president of Saatchi & Saatchi Richard Humphreys, who is the ad expert; telecom entrepreneur Jack Baron; software development expert Dr Mandar Chitre and Raj L Gupta, who is on the board of HP and advises Affle on strategy.

Affle has eight offices and operates in Singapore, India, China (Beijing), the UK (London), the USA (New York), Indonesia, Australia, Thailand (Bangkok) and Malaysia. The company has on board 70 employees, of whom 30 are based in Singapore.

The firm claims that it has now reached over 500 million subscribers globally and a total of 100 advertisers use its platforms to deliver ad campaigns. In India, the company has recently partnered with mobile instant messenger app maker eBuddy for exclusive rights to sell advertising inventory in the country.

Why D2C

D2C is a mobile advertising agency in Japan, with rights to sell inventory on carrier NTT DoCoMo (it has 57 million subscribers), as well as on websites such as Mixi.jp, Gree.jp, Yahoo! Mobile and Mobage-town (DeNA). It will utilise Affle's network of mobile carriers, ad agencies and advertisers. It will also share mobile ad and marketing know-how for the Japanese market to Affle.

Takayuki Hoshuyama, CEO of D2 Communications, said, "We believe that developing Asian markets have huge untapped potential for mobile advertising and we are confident that our experience from Japan would help Affle become the dominant mobile advertising player in these mobile-first markets."

On how the partnership will help Affle, Sohum explains, "It will mean new technology and new ad formats for us. We will be leveraging the two networks of Dentsu, an expert in mobile advertising, and NTT DoCoMo, the largest telco in terms of data revenue, to grow our regional level partnerships with Japanese advertisers and brands. Mobile advertising is still growing in Japan while other forms of advertising have plateaued. We will work closely with D2C on all its accounts. The D2C partnership will help us increase the amount of spend to a greater percentage of the budget."