ValueFirst, which recently raised money for the purpose of closing multiple acquisitions, is eying a major acquisition in the next 2-3 months, COO Kumar Apoorva told MediaNama. “We’re looking for organizations that have revenues of at least $9-10 million, and if not very profitable, but at least reasonably EBITDA positive, which we can make more profitable and scale further.” Apoorva said that enterprise communication businesses in Europe and Africa have lower volumes and higher ARPU, but due to high cost structures, are not profitable. ValueFirst will acquire and integrate with its own business, in order to reduce costs and make it profitable. As a part of its international expansion plan, ValueFirst is also planning a foray into the US market, which the company claims is a larger market in terms of SMS volumes than India.
To Acquire Email Product
In addition to this, ValueFirst is eying acquisitions in email products, and is in preliminary discussions with two companies in India, and one internationally. “We have SMS and voice, but are missing out on Email. The email space is becoming big – bank alerts can come to you on SMS, but a lot of other information comes on email – account details transaction details etc. We don’t have IP in Email, and it will take time to develop a platform and make it market competitive, so that messages are white listed. An email product company will complete our communication portfolio.”
Media Business: Plans Fundraising & Acquisitions; Google SMS Deal
“SpotOn Media is averaging Rs. 40 lakhs a month, with a burn rate of 15-16 lakhs. In this financial year, we’ve had 310 unique clients, and many more campaigns,” according to Apoorva. SpotOn Media is ValueFirst’s consumer business subsidiary, which does SMS based advertising. It is monetizing inventory of other opt-in networks as well. Apoorva said that around 2.5 months ago, SpotOn Media signed an exclusive contract with Google to monetize the Google SMS channel inventory.
ValueFirst intends to raise another round of funding, separately, for SpotOn Media, and do another acquisition. Following the acquisition, Apoorva says that they’re targeting that the venture will do over Rs. 20 crore in revenues in the coming year. “Our overall media plan is that 3-4 organizations put together will be worth more than Rs. 100 crore in three years. Investors are showing reasonable interest there, and we’re profitable, This media company is one of the few organizations that has started making money on mobile SMS marketing,” he reminds us. We haven’t got the latest figures, but according to ROC documents, for the year ended March 31st 2009, SpotOn Media reported a loss of Rs. 29.91 lakh.
Apoorva said that through acquisitions, the company intends to scale its revenues, so that by November or December, they can start work towards and IPO. The company intends to do at least Rs. 200 crore in revenue before it looks at an IPO, and pragmatically, Apoorva says that if acquisitions fall through, then it might take a little longer – hence the 18-24 month timeframe. According to filings made by the company to India’s Registrar of Companies, ValueFirst Messaging had reported revenues of Rs. 22.45 Crore and a profit after tax of Rs. 2.45 crore for the financial year ending March 31st 2009: almost two years have elapsed since then, but Apoorva declined to comment on these numbers, saying only that
in the last year alone since 2008-09, over 24 montha, the company has grown by 400 percent. The acquisitions made since its last round of funding – of CellNext, PacketShaper and Tagg.in, would have added to its product portfolio and revenues. Apoorva says that the company has been profitable for the last five years, and the documents we accessed do not give an indication to the contrary.
TRAI Guidelines & Their Impact on ValueFirst
Valuefirst’s SMS business accounts for 77-78% of its business, and while the company has been trying to grow its non-SMS business, it would be expected to feel the impact of the TRAI Guidelines regarding push messaging.
Apoorva has a different take: he says that fund raising (of $15 million) just around the time that the guidelines are coming into play validates investor confidence in the company. “The fact is that we’ve had enterprise clients throughout, with genuine use cases and practically no complaints. Most of our traffic is not impacted by these regulations. The only services that get impacted are the promotional communications. We’ve consistently compliant, and been scrubbing promotional traffic for the last 1.5-2 years.”
But doesn’t the six-strike policy (where a telemarketer gets banned if six complaints against it are validated) increase its risk of operation? “All our promotional activities will be through a subsidiary, and we’ll do transactional traffic through ValueFirst. We’ve deployed a template matching technology. For example, if a bank is sending an ATM alert, and it’s a format which has been specified, and we do a match before sending. That also removes the possibility of someone using a transaction pipe for a promotional message,” he says.
Apoorva believes that if this regulation is implemented well, the unscrupulous marketers who have not been scrubbing their traffic, or selling NDNC inclusive databases to clients will be hit. “We’ll benefit from clients moving away from them, as well as from the restriction on the modem farms. Look at the amount of penalty: someone who has done a violation 3-4 times, they’ll have to pay a penalty of Rs. 2-3 lakhs, which they cant afford. The top 2-3 players in the industry will benefit from this. Clients can give us white-lists of their employees, and we’ll send messages only to them. There are technology solutions to these problems.”
“Consumer backlash is the greatest impediment to the growth of this industry. If this regulation is successful, consumer backlash will reduce, and they’ll become more receptive to genuine services, which will help grow the industry,” he adds.