Tencent, Foxconn bet $175m on Hike messenger in its race with WhatsApp

Kavin Bharti Mittal, founder and CEO of Hike. PHOTO CREDIT:Hike

Kavin Bharti Mittal, founder and CEO of Hike. PHOTO CREDIT:Hike

Facebook’s WhatsApp may soon find itself in serious competition in India with home grown chat app Hike Messenger, as the four-year-old company secured US$175 million funding from Chinese internet giant Tencent and manufacturing firm Foxconn.

This is the fourth venture capital round and the biggest to date for Hike, taking the total investment to over US$250 million so far. Existing investors – Tiger Global, Bharti, and Softbank Group – also participated in this round.

Apart from the size of the funding, the deal is important also on the count that Tencent, the company that pioneered messaging with WeChat, is bringing on board expertise and innovations of international standards.

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Hike users will soon be able to see and share videos and pictures based on alternate realities.

The fact that Tencent and Foxconn valued the company at a whooping US$1.4 billion also says a lot about the confidence entrusted on a brand like Hike.

The valuation, at the rate of over 100 million subscribers (Hike did not say how many were active), translates roughly to US$14 or INR 1,000 per user. Founder and CEO of Hike Kavin Bharti Mittal said the company is “still a couple of years away from making profits,” but is confident of monetizing the said valuation when the company does start making cash.

“Tencent and Foxconn both have pedigrees that speak for themselves. Their investment also means that their expertise will come on board. Especially in today’s market where funding is drying out, this is an extraordinary deal,” Kavin said.

“We will use the funds to justify the valuation. We will be investing this amount in services, people, office space and some long term bets in areas of machine learning, computer vision, augmented and virtual reality features,” he added.

This implies that Hike messenger is working hard to get users addicted to the platform, where they will soon be able to see and share videos and pictures based on alternate realities.

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Kavin told Tech in Asia that the company is also working on a feature where the app will use a special sensor in the smartphones to capture and attach smell to messages. Brand channels built on geolocation is another feature the company is working towards. By way of technical know-how sharing, WeChat’s popular mobile wallet feature, where friends can send cash to each other digitally, may also find way into Hike platform.

In a bid to differentiate from the likes of WhatsApp, Line, and Viber, Hike messenger recently introduced social gaming feature on its platform that gained 100 million plays in a matter of just 26 days. The platform also offers localized stickers, about 10,000 of them, along with themes and multi-lingual interface to target its tech-friendly consumer group of 15-24 year olds.

WhatsApp, on the other hand, has stayed away from branding tie-ups altogether, while its texting features remain basic. Although the company has introduced calling facility, rivals such as Snapchat and Hike have re-invented the market with additional quirky features and stickers that have been a hit with youngsters.

Acquisitions on the cards

WhatsApp is still the dominant messaging app in India, but four-year old Hike is catching up to the American rival.

Much like WeChat, which focuses on providing multiple services and apps to run independently inside its own service, Hike allows you to do the same on its messaging app.

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It has several mini services, including bite-sized news bulletins, games, coupons, and a carpooling app integrated right into its platform. These integrated services, the free SMS service, and the feature to hide chats from nosy relatives is what sets the Indian messaging service apart from Facebook-owned WhatsApp.

Kavin said the company will also look for acquisitions in technology space, but added that “it will take some time.” In January 2016, Hike had announced it has a base of 100 million users. As much as 95 percent of Hike users are based in India and 90 percent of them are young and below the age of 30. According to the company, Hike users, on average, exchange 40 billion messages per month, spending about 120 minutes per week on the platform.

With Tencent’s involvement, Hike messenger may also find way into new markets such as Sri Lanka and Bangladesh.

This article originally appeared on Tech in Asia

Original news : http://tribune.com.pk/story/1163769/tencent-foxconn-bet-175m-hike-messenger-race-whatsapp/