Gupshup Raises $240M Funding - Business Messaging Platform

Gupshup Secures Additional Funding, Solidifying Unicorn Status

Fifteen years after its inception in India, Gupshup, a leading business messaging platform, garnered significant attention by raising $100 million in April. This achievement followed a decade-long gap since its previous funding round and resulted in the company attaining unicorn status. Now, just three months later, the San Francisco-based startup has successfully obtained further investment from prominent investors.

New Investment Details

Gupshup announced on Wednesday the acquisition of an additional $240 million as part of the ongoing Series F financing round. Leading this new investment were Fidelity Management, Tiger Global, Think Investments, Malabar Investments, Harbor Spring Capital, accounts managed by Neuberger Berman Investment Advisers, and White Oak.

Key Investor and Valuation

Notably, Neeraj Arora, a former key executive at WhatsApp instrumental in its acquisition by Facebook, contributed significantly to this latest investment tranche. The funding maintains the startup’s valuation at $1.4 billion, as established in April.

Expansion of Financing Round

In a recent interview with TechCrunch, Beerud Sheth, co-founder and CEO of Gupshup, explained that he broadened the financing round due to an overwhelming number of investor inquiries. He emphasized that the new investors will bring valuable insights and expertise to the company. The round has now been formally completed.

Platform and Future Plans

Gupshup’s conversational messaging platform currently serves over 100,000 businesses and developers, enabling them to create customized messaging and conversational experiences for their users. Sheth indicated the company is beginning to evaluate the possibility of an initial public offering (IPO) within the next year, though a final decision remains pending.

Growth Drivers and Market Trends

“The increasing importance of conversation in business, accelerated by the pandemic, is a key factor,” Sheth stated. “Furthermore, our consistent leadership in this sector, coupled with product innovation over the past two to three years, has proven beneficial.”

Use of Funds and Potential Acquisitions

The new capital, which includes a secondary buyback allowing early investors and employees to sell their stakes, will be used to expand Gupshup’s product portfolio. The company is also actively exploring potential mergers and acquisitions (M&A) and anticipates closing deals this year.

From Consumer Messaging to Enterprise Solutions

Prior to its success in the business sector, Gupshup operated differently. For its first six years, the platform was primarily known for facilitating group messaging among users in India. This service provided affordable communication options for millions of Indians.

Challenges with the Original Model

Sheth explained in a previous TechCrunch interview that the original model ultimately became unsustainable. Gupshup was subsidizing message costs to mobile operators, hoping to offset expenses through advertising. However, operators did not lower prices, and regulations prohibited advertisements within messages.

Strategic Pivot to Enterprise Focus

This led Gupshup to undergo a significant pivot. “We were unable to continue subsidizing messages or monetize our user base,” Sheth said. “However, we possessed advanced technology for high-performance messaging. Consequently, we transitioned from a consumer model to an enterprise model, serving banks, e-commerce companies, and airlines requiring reliable, high-volume messaging.” Sheth also co-founded the freelance platform Elance in 1998.

Expanding Messaging Channels

Over time, Gupshup has broadened its capabilities to include conversational bots and tools for businesses to manage and optimize their WhatsApp channels for customer engagement.

Client Base and Use Cases

Sheth noted that numerous leading companies across banking, e-commerce, travel, hospitality, and other industries utilize Gupshup. These firms leverage the platform to deliver transaction information, authentication codes, and other essential service updates to their customers. “These are not promotional messages; they are vital service communications,” he clarified.

Investor Perspective

Sumeet Nagar, Managing Director of Malabar Investments, stated, “We have closely monitored Gupshup’s development and believe it is the most advanced customer communications platform in India, with a growing presence in emerging markets. They hold a leading position in the most attractive and rapidly expanding segments of the market.”

Long-Term Growth Potential

Nagar continued, “Beerud and his team have a unique opportunity to expand the addressable market through new offerings and significantly scale the business, creating substantial value. Having known Beerud for over three decades, we at Malabar are thrilled to partner with Gupshup in this next phase of their journey.”