Japanese news app Gunosy to IPO in April with $263M market cap

Japan’s news app war continues and Gunosy has won the latest round. In a filing approved by the Tokyo Stock Exchange today, Gunosy confirms that it will IPO on April 28. The startup is looking to raise JPY 5.32 billion (US$44.5 million) and expects an initial market cap of JPY 31.4 billion (US$263 million).

Both figures are subject to change as the number of shares to be issued might be adjusted. Bloomberg is reporting that the company is seeking a market cap of US$330 million. The IPO is a happy ending for a company that started as a student project for Yoshifumi Seki, Hiroshi Yoshida, and Yoshinori Fukushima (the current CEO) in Tokyo University about 3.5 years ago.

The IPO will be the largest fundraising event in Japan’s tech space so far this year, trumping Raksul’s US$33.7 million and Metaps’ US$36 million rounds. Both were for series C. Last year, Gunosy raised US$24 million is two series A rounds, spaced three months apart.

Gunosy operates a titular news curation app that sparked the industry’s current boom. Recently it has made moves that include creating channels for partners like DeNA’s travel business to position itself as more than a content aggregator. The company has stated in the past that intends to become a general mobile portal service. Doing so should drive user numbers up and result in better advertising rates.

That seems to be happening already. The filing shows that downloads are increasing (8.86 million as of Feb 28) and revenue growth is accelerating. For the year from June 1, 2013 to May 31, 2014, Gunosy ran a net deficit of JPY 1.39 billion (US$11.6 million) against revenue of JPY 359 million (US$3 million). In the half-year that followed, which coincided with the launch of the startup’s native advertising platform, revenue soared to JPY 1.28 billion (US$10.7 million) and the net deficit shrunk to JPY 301 million (US$2.52 million).

Who wins?

The IPO is going to make several investors very happy. Telco KDDI and VC firm Jafco with 16.93 and 10.16 percent of the company, respectively, will make a nice return on their investment. The biggest winner, however is co-founder Shinji Kimura who has 41.12 percent and could see his share valued at JPY 12.9 billion (US$108 million). Perhaps unsurprisingly, the Japanese native’s address is listed as being in Singapore.

The windfall might give Kimura the last laugh in one of Japan’s most-whispered about startup spats. Kimura, a serial entrepreneur and angel investor had sold his online advertising startup to Gree in 2011. He left Gree in 2013, joining the Gunosy founding team via investment shortly thereafter. Kimura’s stay was short – he abdicated his roles as representative director and co-CEO at the end of August 2014.

At the time, the startup maintained that Kimura was never supposed to stay on for very long after setting up Gunosy’s ad network. However, as TechCrunch Japan reported last year, it is generally understood that Gree accused him of violating his non-compete agreement and threatened to sue, prompting his sudden resignation.

Kimura’s share valuation notwithstanding, there is still another act to play out in this drama. Gree led the US$36 million investment in Gunosy rival SmartNews last August. The app has 10 million downloads of its own with 4 million monthly active users in Japan, and another 1 million in the US. It has content deals with internationally known brands like Fast Company, Reuters, and BuzzFeed. As of last October, the firm is worth over US$100 million.