CPP Investments and OTPP's Big Investment in India's VerSe Innovation

Shrabona Ghosh of Entrepreneur India reports VerSe Innovation raises $805 million:

VerSe Innovation, a local language technology platform, has raised $805 million in its latest funding round from marquee global investors Canada Pension Plan Investment Board (CPP Investments), Ontario Teachers' Pension Plan Board (Ontario Teachers’), Luxor Capital, SumeruVentures, among others.   

The investment will be focused on strengthening the company’s leadership position. VerSe plans on deepening and broadening its AI/ML and data science capabilities to further cement its leadership position across all user, engagement and retention metrics, drive deeper monetization including influencers, e-commerce, live streaming and forays into Web 3.0 experiences. 

“India’s digital content is experiencing phenomenal growth and VerSe Innovation is well positioned to be one of the leaders in the fast-growing short video and local language content space. This investment aligns with our approach of providing strategic capital to industry leaders in India’s technology sector. We look forward to supporting the next phase of VerSe Innovation’s growth journey, which we believe will deliver strong risk-adjusted returns for the CPP Fund,” said Frank Su, managing director, head of private equity Asia, CPP Investments. 

“We are pleased to make a significant investment in VerSe Innovation through our new alternative capital solutions team, which offers flexible capital to high-quality public and private growth companies. We have been impressed by the company's innovative local language offerings, market leadership and strong management team and are excited to be partnering with them in this journey as Ontario Teachers’ continues to build out its portfolio in India,” Maggie Fanari, MD and global group head, High Conviction Equities at Ontario Teachers. 

VerSe Innovation’s proprietary technology platform powers 350 million-plus users to consume content in their local language on Dailyhunt. Its technology also powers short-video app Josh and Hyper Local Video Social app PublicVibe. The company is valued at about $ 5 billion and has raised over $ 2 billion.

OTPP put out this press release on this deal: 

VerSe Innovation, India’s biggest local language technology platform, today announced it has raised & signed definitive documents for US$ 805 million in latest funding rounds from marquee global investors Canada Pension Plan Investment Board (CPP Investments), Ontario Teachers' Pension Plan Board (Ontario Teachers’), Luxor Capital, Sumeru Ventures and others. Existing investors Sofina Group, Baillie Gifford & others will also participate north of their pro-rata in this round resulting in VerSe Innovation’s valuation reaching ~US$ 5 billion. The US$ 805 million investment follows close on the heels of a US$ 650 million+ fund raise from Siguler Guff, Carlyle Group, Baillie Gifford, Falcon Edge Capital via Alpha Wave Ventures, Glade Brook Capital, Google, Microsoft and Qatar Investment Authority taking the total capital raise in the past year to ~US$1.5 billion.

The investment will be focused on strengthening the Company’s leadership position as the largest, fastest growing local language AI driven content platform in the country. Herein, VerSe plans on both deepening and broadening its AI/ML and data science capabilities to further cement its leadership position across all user, engagement & retention metrics, drive deeper Monetization including influencers, e-Commerce & Live streaming and forays into Web 3.0 experiences across its local language creator base of over 50 million creators as well as its local language content ecosystem which experiences over 80 billion video plays per month.

“India’s digital content is experiencing phenomenal growth, and VerSe Innovation is well positioned to be one of the leaders in the fast-growing short video and local language content space,” said Frank Su, Managing Director, Head of Private Equity Asia, CPP Investments. “This investment aligns with our approach of providing strategic capital to industry leaders in India’s technology sector. We look forward to supporting the next phase of VerSe Innovation’s growth journey, which we believe will deliver strong risk-adjusted returns for the CPP Fund.”

Maggie Fanari, Managing Director and Global Group Head, High Conviction Equities at Ontario Teachers'​ said “We are pleased to make a significant investment in VerSe Innovation through our new Alternative Capital Solutions team, which offers flexible capital to high-quality public and private growth companies. We have been impressed by the company’s innovative local language offerings, market leadership and strong management team, and are excited to be partnering with them in this journey as Ontario Teachers’ continues to build out its portfolio in India.”

Virendra Gupta Founder and Umang Bedi, Co-founder, VerSe Innovation, said, “We are privileged and honoured to have prominent and stellar long-term partners like CPP Investments, Ontario Teachers', Luxor Capital and Sumeru Ventures on board with us. This partnership will strengthen our ability and leadership to deliver on our vision to build the largest AI powered local language content platform across a family of apps serving the next billion users. With a strategic focus on video content and building for India, we have seen explosive growth emerging from the next billion users coming out of regional India. This investment comes at a time when we’re on a path to further expand our offerings, monetization models, deliver superlative Web 3.0 experiences for the globe and create an IPO scale business.”

Avendus Capital was the exclusive financial advisor to VerSe Innovation on the transaction.

VerSe Innovation’s proprietary technology platform serves one out of every two internet users in the country across ‘Josh’, India’s largest short video platform and ‘Dailyhunt’, India’s largest local language content platform coupled with ‘PublicVibe’, India’s fastest growing hyper local video platform. Josh is the fastest growing and most engaged short-video app in India with over 150 million MAUs (Monthly Active Users), the best DAU/MAU ratio in the industry of 49% and the highest retention. Josh represents a confluence of India’s top 200+ best creators, the 15 biggest music labels, best in class content creation tools, the hottest entertainment formats, and formidable user demographics. Dailyhunt serves over 350 million+ users every month offering content artifacts every day in 15 languages from a licensed creator ecosystem of over 100,000 content partners and individual content creators. PublicVibe serves over 5 million monthly active users (MAUs) and 1 million daily active users (DAUs) and has over 6 million+ downloads on the Play Store.

VerSe Innovation, with its family of apps focused on Bharat, became the first unicorn in tech for local languages and counts Goldman Sachs, Falcon Edge Capital, Sequoia Capital India, Matrix Partners India, Lupa Systems, B Capital Group, IIFL, Kotak, Catamaran, Bay Capital, Edelweiss and Omidyar Network, among others as existing investors.

About VerSe Innovation:

At the core of VerSe Innovation, is the idea that technology can help bridge the digital divide. Since its inception, VerSe has risen to the challenge of serving the unmet content needs of millions of consumers using technology. Its unique artificial intelligence, machine learning and deep learning technologies enables personalised content to be delivered to millions of users based on their consumption preferences. Today VerSe Innovation’s proprietary technology platform powers 350 million + users to consume content in their local language on Dailyhunt. Its technology also powers India’s #1 and most engaging short-video app Josh and India’s fastest growing Hyper Local Video Social app PublicVibe. The company is valued at about US$ 5 billion & has raised over US$ 2 billion of capital.

CPP Investments which financed almost half of the latest round (US$375 million), bringing its total investment in the company to US$425 million, also put out a press release on this deal:

Canada Pension Plan Investment Board (CPP Investments) today announced that it has invested US$425 million in VerSe Innovation Private Limited, one of India’s leading content technology platform companies. Following an initial equity investment of US$50 million in VerSe Innovation’s previous funding round, CPP Investments acted as a lead investor in the latest round with a further US$375 million equity investment.

Founded in 2007, VerSe Innovation is one of the fastest growing local language artificial intelligence (AI)-driven content platforms in India. It operates Dailyhunt, one of India’s largest local language content platforms, and Josh, one of the country’s largest short video platforms. VerSe Innovation also runs PublicVibe, a fast-growing hyper local video platform. The company has a local language creator base of over 50 million in India, with over 80 billion video plays per month.

VerSe Innovation has raised US$805 million from the two most recent funding rounds, with participation from existing and new investors, including Ontario Teachers’ Pension Plan Board (Ontario Teachers’), Luxor Capital, Sumeru Ventures, Sofina Group, Baillie Gifford and others. The newly raised funds will be used to strengthen VerSe Innovation’s strong position in the local language content space in India by enhancing its AI and machine learning capabilities and broadening its offerings to include areas such as e-commerce and live streaming.

“India’s digital content is experiencing phenomenal growth, and VerSe Innovation is well positioned to be one of the leaders in the fast-growing short video and local language content space,” said Frank Su, Managing Director, Head of Private Equity Asia, CPP Investments. “This investment aligns with our approach of providing strategic capital to industry leaders in India’s technology sector. We look forward to supporting the next phase of VerSe Innovation’s growth journey, which we believe will deliver strong risk-adjusted returns for the CPP Fund.”

Virendra Gupta, Founder of VerSe Innovation, said, “We are privileged and honoured to have prominent and stellar long-term partners like CPP Investments, Ontario Teachers’, Luxor Capital and Sumeru Ventures on board with us. This partnership will strengthen our ability and leadership to deliver on our vision to build the largest AI powered local language content platform across a family of apps serving the next billion users.”

Umang Bedi, Co-founder of VerSe Innovation, added, “With a strategic focus on video content and building for India, we have seen explosive growth emerging from the next billion users coming out of regional India. This investment comes at a time when we’re on a path to further expand our offerings, monetization models, deliver superlative Web 3.0 experiences for the globe and create an IPO scale business.”

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2021, the Fund totalled C$550.4 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.

This is a big deal and I'd like to go over why very quickly below:

• Founded in 2007, VerSe Innovation is one of the fastest growing local language artificial intelligence (AI)-driven content platforms in India. It operates Dailyhunt, one of India’s largest local language content platforms, and Josh, one of the country’s largest short video platforms. VerSe Innovation also runs PublicVibe, a fast-growing hyper local video platform. 
• The company has a local language creator base of over 50 million in India, with over 80 billion video plays per month. The platform powers 350 million-plus users to consume content in their local language.
• It is valued at about $ 5 billion and has raised over $ 2 billion since its founding from powerhouse investors. For example, the US$ 805 million recent investment follows close on the heels of a US$ 650 million+ fund raise from Siguler Guff, Carlyle Group, Baillie Gifford, Falcon Edge Capital via Alpha Wave Ventures, Glade Brook Capital, Google, Microsoft and Qatar Investment Authority. Moreover, the company already counts Goldman Sachs, Falcon Edge Capital, Sequoia Capital India, Matrix Partners India, Lupa Systems, B Capital Group, IIFL, Kotak, Catamaran, Bay Capital, Edelweiss and Omidyar Network, among others as existing investors.
• The company raised US$805 million from the two most recent funding rounds, with participation from existing and new investors, including CPP Investments, OTPP, Luxor Capital, Sumeru Ventures, Sofina Group, Baillie Gifford and others. 
• The latest investment will be focused on strengthening the company’s leadership position. VerSe plans on deepening and broadening its AI/ML and data science capabilities to further cement its leadership position across all user, engagement and retention metrics, drive deeper monetization including influencers, e-commerce, live streaming and forays into Web 3.0 experiences.
  
• CPP Investments acted as the lead investor in the latest round with a further US$375 million equity investment, adding to its US$50 million initial investment in the previous round. 
• We don't have details on how much OTPP invested in the latest round but my best guess is it's anywhere between US$75 million to US$100 million or more.
• That means together, CPP Investments and OTPP have financed roughly 25% of the over US$2 billion VerSe Innovation has raised since its founding and roughly 30% of the total capital raise in the past year ( ~US$1.5 billion).

Now, as the lead investor in the latest round, CPP Investments is taking a huge stake in VerSe Innovation (US$425 million) and OTPP is also taking a big stake (US$100 million?).

Together, two of the largest and best Canadian pensions are going to own a massive stake in one of India's biggest technology growth stories:

Umang Bedi, Co-founder of VerSe Innovation, added, “With a strategic focus on video content and building for India, we have seen explosive growth emerging from the next billion users coming out of regional India. This investment comes at a time when we’re on a path to further expand our offerings, monetization models, deliver superlative Web 3.0 experiences for the globe and create an IPO scale business.”

India's young, tech savvy population is hungry for video content and that represents billions of eyeballs and huge monetization through online ads, data analytics, e-commerce, social influencers and more.

I'm just providing you a glimpse of the tremendous potential here.

Again, look at all the investors from earlier rounds which include names like Microsoft and Google and you begin to understand why this is a really big deal.

So hats off to CPP Investments' Private Equity team and OTPP's new alternative capital solutions team for investing in this company at this relatively early stage (it's a late-stage growth equity investment in an established private company which is growing fast).

Critics will claim it's risky and to be sure, there's always risk investing in these late-stage tech companies, but the potential gains are commensurate with the risks.

If VerSe Innovation continues to grow and gather hundreds of millions more users in India and elsewhere (like Indians living abroad), then its IPO will be huge and all the early investors will make windfall gains on their investment.

More importantly, investors like CPP Investments and OTPP, both have long investment horizons and they're not just looking to score big on some IPO. They're looking to partner with this Indian company over the next decade and longer to really get the most out of this relationship over the long run.

And it's the 20 million + members of the Canada Pension Plan and Ontario's 333,000 active and retired teachers who will benefit from these investments.

The most important point I want everyone to understand is pensions must take intelligent risks across public and private markets to deliver the required returns over the long run.

Financing tomorrow's big disruptors wherever they are is an important way to deliver on this mandate.

Is it risky? Yes but I would say it's necessary to take these risks especially when you've done your homework and are investing alongside premiere global investors.

I have no doubt VerSe Innovation will significantly strengthen its leadership position using the capital from this latest raise and it will become a long-term success story which global investors will invest in. 

CPP Investments and OTPP are just lucky they're getting in there early (just like some investors were lucky to have invested in Google early on).

Below, Dailyhunt’s parent company and founders of Josh app, VerSe Innovation raised $805 million at a valuation of $5 billion.

I also embedded a recent interview with Umang Bedi, VerSe Innovation (Dailyhunt & Josh) at IGF Bengaluru 2022. Listen carefully to his insights, he provides great advice for aspiring entrepreneurs and discusses why their platforms are leading the way into Web 3.0 experiences. 

Update: I edited my initial comment which stated this investment was made through Teachers' Innovation Platform (TIP) headed by Olivia Steedman. It was made by the new Alternative Capital Solutions teams (ACS) which is part of the High Conviction Equities team headed by Karen Frank.

Dan Madge, Director of External Communications at OTPP sent me some clarification to understand the difference between TIP and ACS in terms of financing private growth companies:

TIP usually invests in series B-E fundraisings, whereas ACS (part of our high conviction equities team) will invest in private companies closer to IPO (I believe the fundraise for VerSe was series L or something like that).

This investment would be in Karen Frank's group rather than Olivia's.

I thank Dan for clarifying this and it makes sense that TIP invests in earlier rounds and ACS as companies get closer to IPO.