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India’s First Billion Dollar Unicorn Turns Profitable

Posted on Wednesday, Jun 7th 2017

According to eMarketer, worldwide digital ad spending will reach $223.74 billion in 2017. Mobile will account for 63.3% of digital in 2017 and is expected to grow to a 77.1% share of digital in 2021. InMobi is an Indian Billion Dollar Unicorn that has recently achieved profitability in this sector.

InMobi’s Journey

InMobi was founded in 2007 by IIT Kanpur alumni Naveen Tewari, Abhay Singhal, Amit Gupta, and their friend Mohit Saxena. After getting his engineering degree and while working at Citifinancial, Amit realized that he did not want to be a software engineer but rather wanted to help businesses implement business IT systems. Within a few years, Amit left his job, set up a company within the business intelligence space. He along with Naveen then went on to set up mKhoj, a SMS-based mobile search venture in Mumbai.

At the end of 2007, the founders pivoted the business model to lean toward mobile advertising. After shifting to the new business model, InMobi crossed $1 million in 2007. In 2008, it expanded to Indonesia and revenue grew to $1.5 million. In 2009, it expanded to Europe and other countries and saw 10x growth.

Today, InMobi offers mobile advertising solutions for leading brands, developers, and publishers. It has a reach of over 1.5 billion unique mobile devices and is used by over 20,000 global advertisers. Its headquarter is now in Singapore and has about 1,000 employees in its offices in India, Indonesia, UK, France, China, UAE, Japan, Korea, Malaysia, Australia, and US. For more on the entrepreneurial journey, read my interview with Amit or listen to the 1Mby1M roundtable in May 2015.

Its suite of products aims to simplify mobile advertising for brands. Its Native ad platform lets users design ads and choose ad layouts best suited for their apps. InMobi Ad SDK is a monetization platform that enables developers to monetize sites and apps with ads. InMobi Studio enables faster creation of mobile rich media ads across multiple platforms for both mobile and tablet devices.

Last year, it launched an advanced video advertising platform that offers a comprehensive suite of ad formats including vertical videos, interactive videos, 360 degree videos, opt-in videos, and in-stream videos. It also launched its mobile-first, in-app remarketing platform that offers rapid integration, advanced targeting, dynamic creatives, and real-time bid optimization to efficiently deliver maximum ROI for advertisers.

Last year, it discontinued its commerce platform Miip, which was launched in 2015. Miip was meant to help mobile phone users discover and buy products relevant to them through targeted mobile advertising.

InMobi’s Financials

InMobi uses the Cost per Click (CPC) model for Appographic and Publisher targeting campaigns. Its automatic targeting campaigns use a CPI (Cost per Install) goal-based pricing where the minimum daily budget for targeting less than five countries is $200 and for targeting more than five countries is $500.

InMobi does not disclose details of its financials but reported recently that it turned operationally profitable in 2016 driven by the growth in its China operations, video ad platform, and remarketing platform. US accounts for 30% of its revenue while China now accounts for 28% of the revenue. India, Indonesia, and Australia are its other major markets.

Revenue from its advanced video ad platform grew over four times over the year. Remarketing revenue has doubled every quarter since Q1 and is being adopted by clients such as Zalora in Southeast Asia, Nuomi in China, and Myntra in India.

Analysts estimate its revenue to have crossed $300 million in 2016. It is expected to end 2017 with revenue of $425 -$475 million and profit of $40 million. It had recorded revenues of $262 million with a loss of around $40 million and cash reserves of $30 million in 2015.

InMobi is venture funded so far with $320.6 million in venture funding from investors including Mumbai Angels, Kleiner Perkins Caufield & Byers, Sherpalo Ventures, SoftBank, and Tennanebaum Capital Partners. It received $7.1 million in 2008 and $8 million in 2010 from Kleiner Perkins Caufield & Byers and Sherpalo Ventures. In 2011, it raised $200 million in a Series C round led by Softbank at an estimated valuation of nearly $1 billion. In December 2014, it raised another $5 million from Softbank at a valuation of $2.5 billion. In September 2015, it raised $100 million in venture debt from Tennanebaum Capital Partners.

Softbank was ready to invest $25 million more in the Series D in 2014 if other investors joined in, but InMobi has struggled to find any investors at that valuation. In early 2016, reports surfaced that Chinese game publisher Youzu Interactive was ready to invest at a valuation of $800 million. However, Softbank, which owns nearly a third of InMobi has the power to veto any investment that comes at a valuation less than $1.5 billion.

The mobile advertising market is dominated by Google and Facebook. But InMobi is perhaps one of the few giving them a fight. InMobi was rumored to the acquisition target of Google for $1 billion in 2015 and Microsoft for $2 billion in 2016. In response to these speculations, CEO Naveen Tewari clarified that it is not for sale but is aiming for an IPO. Now that it has achieved profitability, it could be a reality.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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