Audio platform Pocket FM secures $103 million in funding as it eyes global expansion | Top Vip News

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India-based audio platform pocket FM has raised $103 million in Series D funding led by Lightspeed Ventures with participation from Stepstone Group. The company, which has Tencent and Times Internet as sponsors, intends to expand to Europe and Latin America after observing positive results in the US market.

The company has now raised $196 million in multiple rounds and is valued at $750 million, TechCrunch has exclusively learned.

TechCrunch reported last year that the company was in talks with Lightspeed to lead the funding round it announced today.

How does the platform work?

Pocket FM mainly offers audio series based on short episodes: users can listen to some series or episodes for free and unlock others by purchasing coins. Instead of taking a subscription-based approach to allowing users to access all content like Netflix or Spotify do, Pocket FM has found that the pay-as-you-go model is more suitable for the company.

The downside, from a revenue standpoint, is that users aren’t locked into recurring payment cycles. But it can still pay dividends and attract repeat purchases: if users want to listen to more content in a series, they have to buy coins, like buying items to level up in a game.

The company is also doubling down on the creator economy. Last month, the company said it plans to invest $40 million in its Wattpad-like writing platform. pocket novel. Last week, company co-founder Rohan Nayak posted on LinkedIn that more than 90,000 writers had signed up for the platform as of February 20. Pocket Novel also pushes users to purchase coins to unlock content.

But although both applications have a coin purchase mechanism to unlock content, there is no integration between them at the moment. That means you cannot use the coins you purchased from Pocket FM to unlock content from Pocket Novel products and vice versa.

Pocket FM also has a limited audiobook vertical where it competes with companies like Audible with a similar pay-to-unlock strategy. The company markets this product only in India with existing partnerships.

numbers game

Pocket FM is typically optimized so that users spend more time on the platform. To achieve this, the audio platform has more than 100,000 hours of content and more than 400,000 episodes in all genres and languages.

The company’s expansion into the United States (it opened its doors there in 2021) has proven to be a major revenue driver. He said Pocket FM has crossed $150 million ARR this year, with a contribution of $100 million ARR from the US. The company is present in other markets, but counts the US and India as its markets bigger.

The platform has also seen a high level of engagement from its US user base. While globally users spend 115 minutes on the audio platform, that average rises to 135 minutes in the US.

Writing platform Pocket Novel, which has local competitors like Omidyar Network-backed Pratilipi, has over 250,000 writers on board. The company wants Pocket Novel to post $100 million in ARR by 2025.

Efforts in GenAI and the creative economy

Not surprisingly, Pocket FM is interested in testing AI-based generative features. It has already begun testing a tool for U.S. writers to turn their writing into audiobooks. The company is working with Eleven Labs to provide writers with a range of 50 AI-powered voices.

The startup noted that it is also working internally on AI-powered tools that will help creators write their stories faster.

While Pocket Novel writers earn through a revenue-sharing program, the startup offers incentives to reach your writing goals. But the use of artificial intelligence tools that often generate unreliable or low-quality results means that there is a lot of mediocre content on the platform.

Nayak told TechCrunch that essentially a platform’s job is to filter out the noise.

“You need to filter out the noise and make sure you filter out the high-quality content that is then made available to listeners. “The way we look at AI, at least in our context, is more about how AI is used to unlock productivity and efficiency gains for creators and writers,” he said.

Pocket FM says some writers on the platform earn more than $3,000 a month, but does not provide information on the average overall income. The company does not apply an exclusivity clause when creators join the platform, but the startup said it has some agreements in place to own intellectual property.

Harsha Kumar, partner at Lightspeed, said that while the appetite for audio content is global, Pocket FM will need to cater to local tastes across different geographies.

Platforms that rely on user-generated content often skew toward popular creators when it comes to visibility and earnings. Kumar believes that an honest recommendation algorithm will play a key role in ensuring parity.

“This is always a difficult balance. Companies can try many things, from hyper-personalization for consumers to using AI assistants to help creators improve and increase their profits. I think the platform recommendation algorithms have a very important role to play, whether the platform recommends popular content or recommends content based on your taste,” he said.

Future investment and expansion plans.

On the other hand, the company is already in talks with investors for its next round. Abu Dhabi sovereign wealth fund ADIA has held talks with Pocket FM for a potential mega funding round, TechCrunch reported last week.

The company did not respond directly to that development, but said it had received significant interest from investors.

“As you scale, in general you see a lot of interest from investors. But whether it is a new round or not depends on our expansion plan and whether something materializes,” Nayak said.

“The biggest challenge is adapting the content to appeal to local taste and context. We’ve found that some regions prefer stories that have more local appeal, where characters have identifiable names and places are known and seen, for example. A separate execution challenge is, of course, building and operating a global organization that imbibes the same culture,” said Lightspeed’s Kumar.

Nayak also mentioned that the company is not yet profitable, but has a high gross margin and is focusing on scaling. The startup has around 800 people and plans to add 500 people worldwide.