Aug 5, 2019 - Economy

News aggregation app SmartNews reaches $1 billion valuation

Sara Fischer
, author of
Axios Media Trends

SmartNews, the Japanese news discovery app that has amassed 20 million global monthly active users, has raised $28 million in its latest funding round, bringing the company's valuation to $1.1 billion, executives tell Axios.

Why it matters: It's notable that in today's bleak news market where U.S. tech giants like Google and Facebook dominate most news referral traffic online, a Japanese-based firm has been able to gain traction. SmartNews is one of the few news-related startups to achieve "unicorn" status, or a valuation of over $1 billion, in years.

Details: The round, which is the company's Series E round, is being led Japan Post Capital Co., Ltd., a Japanese private equity fund management firm. To date, the company has raised $116 million and brings in revenue of "9 figures" annually, according to SmartNews head of U.S. marketing Fabien-Pierre Nicolas.

While the company does hire editors to ensure quality control on the platform, most of the money raised will be going toward technology development, says Nicolas.
SmartNews is looking to hire more engineers to bolster its U.S. product, as well as to penetrate other markets with research and development centers, like Shanghai.

Between the lines: The company is currently the largest news aggregation service in Japan, but has been rapidly growing its U.S. footprint.

Axios reported in February that SmartNews had quadrupled its U.S. audience over the past 2 years and now drives more traffic to publishers than Apple News, according to traffic news referral service Parse.ly.
SmartNews is most similar in product to Apple News in the U.S., but it's free instead of charging users a monthly subscription. The company makes the majority of its revenue from advertising, and executives say they have no plans to turn it into a subscription product.

By the numbers: According to Nicolas, the company had 10 million monthly active users of its app last July and it has doubled that number to 20 million in roughly a year.

It works with roughly 400 U.S.-based news and information publishers, a few of which have told Axios that the traffic bumps from SmartNews are significant, but the revenue sharing operation could be stronger.

Nicolas says that it works with about 400 news partners in Japan as well, although they count publishers a bit differently in that market.

The big picture: SmartNews is the latest Asian news aggregation app to make it big.

Toutiao, which is owned by TikTok's parent company ByteDance, raised $2 billion in funds at an over $20 billion valuation in 2017. It reportedly has more than 200 million daily active users.
Qutoutiao, the 3-year-old news and video aggregation startup backed by Tencent, recently announced that it is receiving a $171 million convertible loan from Chinese tech behemoth Alibaba. The company went public in the U.S. last year with roughly 50 million monthly active users and a market value of $2.1 billion.
DailyHunt, NewsPoint and others have also gained traction in recent years in India. DailyHunt has raised $98 million to date.

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