With $33M funding, Sequoia-backed FreeCharge pivots to targeted advertising

Everybody loves a reward. Even more so if you get rewarded for something you would’ve done anyway. That’s the premise that FreeCharge, one of India’s hottest startups, began with. It gifts freebies to users who recharge their prepaid mobile phones, direct-to-home satellite television connections, or data cards through the Freecharge platform.

Thanks to the mobile explosion in India, the Bangalore-based startup has been growing exponentially – mobile transactions on the FreeCharge app have grown 30 times since January. It now has over 10 million registered users, and is sitting on a goldmine of data. It knows the spending habits of all of them – the discount coupons they opt for, brands they like, and so on.

For marketers, these precious insights could help them target the right audience, and FreeCharge wants to capitalize on that. It is going to build a marketing product on top of its current reward-based recharging platform. Brands can use it to reach consumers relevant to them, without having to waste money on blanket ads, Alok Goel, CEO of FreeCharge, tells Tech in Asia.

To do that, the four-year-old startup has raised US$33 million in series B funding from Sequoia Capital, Belgium-based Sofina, and Russia’s Ru-Net. With the pivot towards targeted marketing, FreeCharge will have a monetizing strategy similar to Google and Facebook. According to Goel, FreeCharge has a clear advantage over the two biggies:

Take Audi for instance. Say it wants to reach out to affluent men in a city. Google and Facebook can tell if a user is male but not if he is affluent. But FreeCharge can. We know what our users spend their money on, we know what coupons and deals our users go for, and so we can give Audi just the right set of audience to target.

He says that FreeCharge’s marketing platform will be the first of its kind in India as it will bridge online and offline marketing.

Preburn, a stealth-mode startup it recently acquired, will be of help here.

App distribution network Preburn already has an online-to-offline business model. It has tie-ups with over 150 mobile phone retail stores across four Indian cities: Delhi, Mumbai, Bangalore, and Hyderabad. When a user buys her first smartphone at any of these stores, Preburn introduces the user to apps that might be most relevant to her. “From the customer’s end, first-time smartphone users could do with some help while on-boarding apps. Preburn does that while helping app publishers grow their user base,” Mohit Mittal, co-founder of Preburn, tells Tech in Asia.

According to Goel, FreeCharge’s plan to build a marketing platform aligned perfectly with Preburn’s scheme of things. “That’s one of the reasons why we acquired the company,” he says. Earlier, it had acqui-hired Wishberg, a social wishlist which shut down after the acquisition. “Together, we will now solve a marketing problem brands face in India.”

Besides India, FreeCharge plans to expand to other emerging markets where many mobile users use prepaid plans. “Seventy percent of our transactions come from mobile platforms and we are growing more than 400 percent year-on-year. With the fresh funding, we are looking at expanding to Southeast Asia, Latin America, and Africa,” Goel says.