Big Money For SMS-Based Social Media: India’s SMS GupShup Takes $10 Million


Credit: Flickr/kiwanja

With a lot of the focus in the mobile universe on Android, Apple (NSDQ: AAPL) and what is happening in the smartphone segment, it’s easy to forget that in many parts of the world, lower-end devices still reign supreme. One funding round announced today highlights the opportunities that still exist in more simple data services: SMS GupShup, which operates SMS-based social networking platform in India — a country with 900 million mobile devices but only nine million smartphones in use — today announced that it received $10 million in funding.

The funding was led by Tenaya Capital, and also had participation from existing investors Globespan Capital Partners, Helion Ventures, and Charles River Ventures, according to a release from the company. GupShup has now raised a total of $47 million since starting out in 2007.

The social media opportunity in the feature phone sector (and even much more basic devices) is not one that has gone unnoticed by the biggest social network of all, Facebook, which has launched services aimed specifically at low-end devices and even bought a company, Snaptu, to develop more of these in future.

SMS GupShup has done more than simply host a social networking platform, though. It gets actively involved as a kind of virtual operator, buying messaging capacity on a wholesale basis from operators, which it then uses as the basis of its group messaging service. According to this profile of founder Beerud Sheth in VentureBeat, the company sends around four billion messages every month. In the funding announcement, GupShup says it accounts for 12 percent of all of India’s messaging traffic currently.

The Mumbai, India-based company offers free services to consumers: users essentially sign up to different special interest groups (which could be a simple as a group of friends, or something bigger around a sports team), and this lets them post messages to the groups and receive messages in turn.

SMS GupShup makes money by charging small businesses and big brands for mobile marketing and advertising services. That customer mix seems to pay off in terms of popularity. SMS GupShup now claims to have 50 million users on its social networking platform in India. That includes five million user-generated communities, 25,000 small businesses and 500 regional and international brands — Nokia (NYSE: NOK), Facebook, Pepsi and Sony (NYSE: SNE) are among those customers.

What’s next? The funding will be used to expand services to more Asian markets such as Singapore and the Philippines, known as the text messaging capital of the world.

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