India’s largest mobile social network SMS GupShup has raised close to Rs 50 crore from a host of venture capital investors, that values the four-year-old company at Rs 1,000 crore. The funding was led by US-based venture capital firm Tenaya Capital along with existing investors Lloyd George, New Horizons, Charles River Ventures, Helion Ventures and Globespan Capital Partners, reports All Things D.SMS GupShup has set up social networks that work through text messages. Users can sign up for interest-based groups and these groups act like small social networks. There are now five million user-generated communities, 25,000 small businesses, and 500 regional and international brands on the service. It has become India’s largest mobile social network with more than 50 million users and the company is targeting Rs 100 crore in revenue by the end of March 2012.
“It’s a low-tech platform. But its weakness is its strength. It is inexpensive and reaches 5 billion users around the world. With our approach, you trade off ubiquity with richness and complexity,” said Beerud Sheth, founder, SMS GupShup in an interview with the VentureBeat.
The SMS GupShup business model works well in India because of the way Indian carriers charge for text messages. In India only the sender is charged a fee, but not the receiver. In the U.S., mobile carriers charge both the sender and the receiver for text messages. According to Sheth, his company pays for bulk messages at wholesale prices to send messages to networks of users. Text ads from brands are attached to target specific kinds of users.
“There are a billion people on the internet today and there will be two billion more in the next two years. They will get there via mobile devices and SMS GupShup is the best way to play that trend. This company could be the Tencent of India,” said Venky Ganesan, managing director of Globespan Capital.
According to Sheth, SMS GupShup will use the money to move into new markets and expand its team which has more than 200 employees right now. The company has plans of expanding its business to other markets in Asia such as Singapore and the Philippines.
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