Twitter's ZipDial buy: Indian startups can expect more money, higher valuations

How cool is it to take the indigenous idea of a small, humble, cost effective and convenient missed call, turn it into a business and make a hefty profit out of it. And then get snapped up by one of the biggest social networking sites around.

This is exactly what ZipDial achieved.

Coming into prominence with its implementation of missed calls for user verification, alerts and other uses, Bangalore-based mobile and analytics company ZipDial has engaged nearly 60 million users with hundreds of marketer clients. Enough for Twitter to sit up and take notice and seal a deal pegged at $30 to $40 million.

Twitters ZipDial buy:  Indian startups can expect more money, higher valuations

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What does a microblogging site do with a missed call? “Well, Twitter plans to use ZipDial's user base to take its service to the audience that either does not a smartphone (and hence have no internet capabilities) and more importantly those that have patchy mobile internet on their smartphones,” explains Sanchit Vir Gogia, Chief Analyst & CEO, Greyhound Research.

A marketers dream come true?

ZipDial has been quietly working away with companies including P&G, Disney, Pepsi and Colgate to give them two to five times more unique users engaging with them than on any social network.

Capitalising on the charge-free, no mobile internet required missed call, ZipDial allows for brands to advertise phone numbers that consumers can call and hang up before any charges are incurred. The advertiser can then return that call or can send promotional text message. Those calls could include recorded messages from celebrities, live sport scores, latest pricing details from realtors or even services such as getting reminders for your favourite shows. The differentiator here is that potential consumers are contacting the brand, rather than the other way around.

The two companies rubbed shoulders two years ago when ZipDial ran a campaign in partnership with Twitter, where users could send a missed call to a dedicated phone number of Bollywood personalities like Shah Rukh Khan and Amitabh Bachchan, and then continue these engagements via SMS even without internet. ZipDial also started to work with Facebook on advertising campaigns, where brands could include a “missed call” button in their Facebook mobile ad that would trigger a phone call to register for further sponsored content and promotions from the brand. But Twitter engagement and response has been better overall.

Commenting on this development, ZipDial said, “We leveraged the ubiquitous behavior of “missed calls” between friends and applied it as an offline call-to-action for brand engagement. Additionally, prepaid recharge or top-up (money added to a user’s prepaid mobile account) is considered as valuable as currency in emerging markets. That became a foundation for our couponing and gratification products. Another central behavior is the very frugal usage of mobile data. Users in India, for example, consume on average 60 MB of data per month, only 4.5% of the 1.38 GB consumed each month by users in the U.S.”

Indian startups putting their game face on

Gogia feels this acquisition is a clear sign from Twitter to treat India as a strategic market and invest more locally to capture audience mind share. And not just Twitter, 2014 has seen some fruitful marriages between bigwigs and Indian startups: Yahoo with Bangalore-based Bookpad and Facebook with Little Eye Labs, also based out of Bangalore. Before that, Prizm Payment Services was acquired by Hitachi and RedBus, one of the biggest names amongst Indian startups was lapped up by one of the biggest names in the travel biz - the Ibibo group.

This is a good time to be an Indian startup and they can surely expect more money, higher valuations.

"2014 will be looked at as an inflection point, the year the world discovered the true potential of the Indian startup," said Mohit Bhatnagar of Sequoia Capital which closed over 40 deals in the year including in mobile gaming firm Octro, ride sharing Zoomcar and customer feedback platform Akosha. "The India startup opportunity is being discussed in global boardrooms," said Bhatnagar. There is good reason for this rising interest from global investors. The valuations of Indian internet companies have soared with increased net access boosting the topline.”

Mirroring this sentiment, Gogia says, “This acquisition will surely act as an emotional booster for the increasingly large base of start-ups (and their investors) in India that are increasingly looking at the likes of Twitter for acquisition. This acquisition and some of recent other investments in India-based start-ups is a good proof point of the future of tech-based start-ups in India.” But putting in a word of caution, he says that it is critical for start-ups in India to offer solutions with a unique positioning and not be a me-too in its space.

The Indian start-up scene does seem to be picking up and will continue to do so over 2015 too, but it’s just not time for them to kick back and relax. Offering a piece of advice to budding startups, Gogia says, “Such deals can be expected but it can be well argued that they can be pre-mature and well ahead of its times. Start-ups require sufficient time and capital to ensure they can reach a significant peak in terms of the visibility and business and selling ahead of this peak can mean smaller valuation and return for investors. While India is home to some highly innovative start-ups, but when compared to its global peers, valuations still remain smallish. More needs to be done to make India based start-ups global in visibility and scale of business.”

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Updated Date: Jan 21, 2015 10:14:14 IST

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