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Helion And Charles River Ventures Invest $11 M In SMS GupShup

So it’s official: Helion Ventures and Charles River Ventures have put in $11 million in SMS GupShup, the push SMS based Mobile social networking community. When the deal had been reported in July, SMS GupShup had offered no official comment to us – and neither a confirmation nor a denial, and Helion never got back. Helion also, strangely, publicly denied funding SMS GupShup, and continued to deny the funding to many execs whom we spoke to. This funding must really be a very very big deal, y’know. Now Helion appears to have timed the announcement of the funding to coincide with the launch of Google’s SMS services, hoping to ride that PR wave.

Nothing new in the press release, except that SMS GupShup is going to target other geographies. Given that the cost of SMS is significantly lower in India as compared to other markets, it’ll be difficult for them to sustain the numbers. We’ve detailed the costs of this business before, and given that advertising budgets are significantly affected in a recessionary economy, their dependency on advertising doesn’t augur well. GupShup could focus on building their enterprises business for revenues.

Also, I wonder if companies like SMS Gupshup and MyToday will get into reselling SMS‘? They get charged a much lower rate (Rs. 0.05 each, or less), while others who buy lower SMS’ are charged anything between Rs. 0.15-0.45 per SMS. They can thus reduce the burden on by reselling. I wonder how Bulk SMS players will react to that – when their clients begin competing with them on price. Whatsay?

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