It was reported this morning that Webaroo/SMSGupShup has raised $10 million in funding - $5 million each from Helion Venture Partners and Charles River Ventures. Push SMS services services like SMS GupShup and MyToday have a big problem - the more the service is used, the higher the cost for the company. The Distribution Model The Webaroo model that is similar to that of a newsletter - one-to-many. A user sets up a SMS GupShup account, and others subscribe to it. Using either a web or mobile interface, whenever the user sends a message, SMS GupShup forwards it to many users. The Costs From our discussions with industry executives, we've learned that for a bulk SMS service, each SMS costs the sender around 10-12 paise (Rs. 0.10 - 0.12, or ($0.0025 - 0.003). However, given the sheer volume of SMS being sent by SMS Gupshup and MyToday, they're given substantially lower rates - of between 5-7 paise ($0.00125-0.0015) per message. Anand Rajaraman of Cambrian Ventures had mentioned that Webaroo sends over 10 million messages a day. The numbers are similar for MyToday. Note that at a recent conference, the CEO of MyToday had mentioned that they account for as much as 3.5 percent of all of India's SMS traffic The Burn Rate, And The Need For Funding For the sake of simplicity, let us assume that SMS GupShup sends 12 million SMS a day, at a rate of Rs. 0.06 or $0.0015. That's $18,000 per day, highlighted in the chart.…
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