Pocket FM’s fresh fundraise likely to value audio streaming startup at $1.2 billion

Pocket FM, an online audio streaming platform, is close to finalising a new fundraise which will likely catapult it into the unicorn club of privately held tech companies valued at $1 billion or more, according to people close the matter.

The audio entertainment startup is in talks with the Abu Dhabi Investment Authority (ADIA) for its latest funding which is expected to value it around $1.2 billion, the people said. The latest funding talks come on the back of the Bengaluru-based company announcing on Wednesday that it had raised $103 million in equity funding.

Existing investors Lightspeed Ventures along with the Stepstone Group participated in the fundraising, valuing the company at $750 million. Besides Lightspeed, China’s tech major Tencent, Tanglin Venture Partners, Bennett Coleman & Company Ltd (BCCL) and Times Internet are its investors. In total, PocketFM has so far raised just under $200 million.

BCCL and Times Internet are housed under the Times of India group which also publishes The Economic Times.

The proposed ADIA-led round will also include a secondary sale of shares by existing investors and could total up to $100 million, said the people in the know. The deal contours are yet to be finalised, they added.

“The talks are still ongoing, but it should close at around $1.2 billion valuations … There are few assets growing at a good pace at $150 million of annual recurring revenue. Their (Pocket FM’s) cost of production is low in India and they generate 70% of their revenues from overseas,” a person aware of Pocket FM’s business said.

A spokesperson for Pocket FM did not offer a comment on the development, but said the firm is “in talks with numerous investors to fuel its expansion”. ADIA declined to comment.

US tech publication TechCrunch first reported about ADIA holding talks for funding PocketFM.

Amid the ongoing funding winter, this would be a sizable investment round if it goes through. In 2024, so far, only two new unicorns have been minted in India: Bhavish Aggarwal-run artificial intelligence firm Krutrim AI and B2B fintech company Perfios.

ET reported on March 21 about how a majority of big-ticket deals have had a secondary sale component, as investors look to liquid their positions. In a secondary transaction, money changes hands between investors, with no proceeds going to the company.

Also read | Pocket FM earmarks Rs 250 crore fund for writers contributing to platform

Pocket size

Pocket FM, which offers audiobooks and serialised audio content in a variety of genres, competes with the likes of Kuku FM, Spotify and Amazon’s Audible in the audio entertainment ecosystem. However, unlike its rivals, Pocket FM relies on micropayments instead of subscriptions for monetisation. Users are allowed to listen to a set number of free episodes per day, after which they must purchase in-app ‘coins’ in order to unlock more episodes.

Micropayments begin at Rs 9 for users in India and $1.99 in the US.

The firm has more than 130 million registered users, with about 10 million of those based in the US. The users based in the US drive the bulk of its monetisation, driving over $100 million in ARR (annual recurring revenue). PocketFM said its global ARR is more than $150 million, with revenue growing at 57% quarter-over-quarter.

Besides India and the US, the firm is also looking to establish operations in the Latin American and European markets. It saw over 20 million transactions in 2023, Pocket FM said on Wednesday.

Of its shows, ‘Insta Millionaire’, ‘Saving Nora’ and ‘The Return’ are among the biggest hits with each earning over Rs 100 crore in revenue, and nearly 15 other audio series products crossing the $1 million revenue mark.

In comparison, IFC-backed Kuku FM relies on subscriptions starting at Rs 99 per month, and has over 2 million subscribers. Its user base is largely in India. Swedish streaming major Spotify, which also offers podcasts and audiobooks, has plans starting at Rs 7 per day, with bi-monthly plans at Rs 119. Amazon-owned Audible’s subscriptions start at Rs 199 per month.