The giant has awoken from its sleepy slumber and no news had been good news for the Japanese news app SmartNews. The company announced a series D round of funding today for US$38 million led by the Development Bank of Japan along with SMBC Venture Capital and Japan Co-Invest. Angel investor and IT entrepreneur Kotaro Chiba also participated in the round with a number of other unlisted investors.
As one of Japan’s most funded startups, people have been holding their breath in anticipation of what SmartNews would do. This latest round of investment shoots the company up the rankings to the number three spot with a little over US$90 million raised.
Domestic growth has been steady for the app which launched an Instant Articles-like feature two months ago and already sees 50 percent of page views coming from the feature. The company has no human editors and relies on algorithms to separate it from the crowded local and international markets.
Japanese rival Gunosy went public last year and currently has a market cap of US$193 million. SmartNew’s bridge round last year valued the company at US$320 million. Although a valuation was not released this time the company told Tech in Asia that this is a significant up round.
News apps have been moving into bringing more local papers and content to users but are still struggling to figure out business models. However, SmartNews is confident in its new custom audience advertisements where it offers different types of targeting, retargeting, and keyword ads. Director of marketing Yohei Matsuoka stated in an email that the customization has led to a two to five time increase in conversion rates.
While monthly active users (MAUs) have grown in Japan to 5.5 million people from four million in January of 2015, international growth has been weak and is still stuck at 1 million users from last year.
That’s not to say the company has not been active in the US and abroad. It hopes to bring its broader daily news discovery mode into popularity by focusing on building content partnerships. “‘News’ often means hard, political news in the US – a turnoff for some audiences. SmartNews, as you know, also delivers a wide variety of topics, from sports to games to food and beauty. We want bring this wider definition of news to everyday people,” explains Yohei.
Trying to force a news culture may be a struggle for SmartNews as it tries to compete with socially curated international powerhouse Flipboard and its over 70 million users. It may have won the domestic battle but the international war is far from over.
Tech in Asia has reached out to SmartNews for clarification on advertisement conversion rates.
Editing by Terence Lee and Michael Tegos
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