In a transaction that values it at $1.4 billion, mobile messaging app Hike Messenger on Tuesday said it has raised $175 million from a set of investors including Tencent Holdings and Foxconn Technologies Group. Existing investors Tiger Global, Bharti Enterprises and SoftBank Group also participated in the Series D round of funding.
With this, the four-year-old Hike joins the club of unicorns or companies that command a valuation of $1 billion or more; others are Flipkart, Snapdeal, Ola, Paytm and InMobi.
The fairly big chunk of funding comes at a time investments into Indian start-ups have slowed. In the six months to June, only $1.7 billion flowed in, versus $3.7 billion in the six months to December 2015. Moreover, private equity funds have been marking down their investments.
Kavin Mittal, founder and CEO of Hike, said the money would be used to develop technology and features in the fields of artificial technology, augmented reality and virtual reality, and also to build a bigger team.
Though the focus at many start-ups has shifted to profitability even at the cost of growth, Mittal ruled out monetising the product whether via advertising, in-app buys like on WeChat or from stickers and branded channels players like Line earned from.
“We can’t say what business model we will have because the product will change in two years from now,” he told FE. He added that once the product was engaging with a critical mass, the firm could take its eye off the product and focus on revenue.
Refuting the popular perception that Hike competes with WhatsApp, Mittal said the three tent poles that Hike stands on are Hike Direct — which allows, users to chat and share files without the internet — Hike Hidden, which affords privacy, and local content. “Language users on Hike are exchanging 300 million stickers per day. Also, over the last six months we have seen people use different apps for different purposes and to communicate with different people,” he said.
Given its software expertise in Android, Foxconn’s presence would be valuable to Hike, Mittal said. “Tencent and Foxconn operate on a large scale and understand the software business,” he added. The fresh infusion takes Hike’s total fund-raising to $260 million. While Bharti SoftBank invested $7 million and $14 million in April 2013 and March 2014, respectively, the company had also seen an investment of $65 million by Tiger Global. In January 2015, Hike Messenger acquired web- development company Thought Mechanics.