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News aggregator SmartNews raises $230 million, valuing its business at $2 billion
SmartNews, a Tokyo-headquartered news aggregation website and app that’s grown in popularity despite hefty competition from built-in aggregators like Apple News, today announced it has closed on $230 million in Series F funding. The round brings SmartNews’ total raise to date to over $400 million and values the business at $2 billion — or as the company touts in its press release, a “double unicorn.” (Ha!)
The funding included new U.S. investors Princeville Capital and Woodline Partners, as well as JIC Venture Growth Investments, Green Co-Invest Investment, and Yamauchi-No.10 Family Office in Japan. Existing investors participating in this round included ACA Investments and SMBC Venture Capital.
Founded in 2012 in Japan, the company launched to the U.S. in 2014 and expanded its local news footprint early last year. While the app’s content team includes former journalists, machine learning is used to pick which articles are shown to readers to personalize their experience. However, one of the app’s key differentiators is how it works to pop users’ “filter bubbles” through its “News From All Sides” feature, which allows its users to access news from across a range of political perspectives.
It has also developed new products, like its COVID-19 vaccine dashboard and U.S. election dashboard, that provide critical information at a glance. With the additional funds, the company says it plans to develop more features for its U.S. audience — one of its largest, in addition to Japan — that will focus on consumer health and safety. These will roll out in the next few months and will include features for tracking wildfires and crime and safety reports. It also recently launched a hurricane tracker.
The aggregator’s business model is largely focused on advertising, as the company has said before that 85-90% of Americans aren’t paying to subscribe to news. But SmartNews’ belief is that these news consumers still have a right to access quality information.
In total, SmartNews has relationships with more than 3,000 global publishing partners whose content is available through its service on the web and mobile devices.
To generate revenue, the company sells inline ads and video ads, where revenue is shared with publishers. Over 75% of its publishing partners also take advantage of its “SmartView” feature. This is the app’s quick-reading mode, an alternative to something like Google AMP. Here, users can quickly load an article to read, even if they’re offline. The company promises publishers that these mobile-friendly stories, which are marked with a lightning bolt icon in the app, deliver higher engagement — and its algorithm rewards that type of content, bringing them more readers. Among SmartView partners are well-known brands like USA Today, ABC, HuffPost and others. Currently, over 70% of all SmartNews’ pageviews are coming from SmartView first.
SmartNews’ app has proven to be very sticky, in terms of attracting and keeping users’ attention. The company tells us, citing App Annie July 2021 data, that it sees an average time spent per user per month on U.S. mobile devices that’s higher than Google News or Apple News combined.
Image Credits: App Annie data provided by SmartNews
The company declined to share its monthly active users (MAUs), but had said in 2019 it had grown to 20 million in the U.S. and Japan. Today, it says its U.S. MAUs doubled over the last year.
According to data provided to us by Apptopia, the SmartNews app has seen around 85 million downloads since its October 2014 launch, and 14 million of those took place in the past 365 days. Japan is the largest market for installs, accounting for 59% of lifetime downloads, the firm noted.
“This latest round of funding further affirms the strength of our mission, and fuels our drive to expand our presence and launch features that specifically appeal to users and publishers in the United States,” said SmartNews co-founder and CEO Ken Suzuki. “Our investors both in the U.S. and globally acknowledge the tremendous growth potential and value of SmartNews’s efforts to democratize access to information and create an ecosystem that benefits consumers, publishers and advertisers,” he added.
The company says the new funds will be used to invest in further U.S. growth and expanding the company’s team. Since its last fundraise in 2019, where it became a unicorn, the company more than doubled its headcount to approximately 500 people globally. it now plans to double its headcount of 100 in the U.S., with additions across engineering, product, and leadership roles.
The Wall Street Journal reports SmartNews is exploring an IPO, but the company declined to comment on this.
The SmartNews app is available on iOS and Android across more than 150 countries worldwide.
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SmartNews raises $92M at a $1.2B valuation
Looks like there’s still money to be made in news aggregation — at least according to the investors backing the news app SmartNews.
The company is announcing the close of a $92 million round of funding at a valuation of $1.2 billion. The funding was led by Japan Post Capital Co. and ACA Investments, with participation from Globis Capital Partners Co., Dentsu and D.A. Consortium.
This includes the $28 million that SmartNews announced in August, and it brings the startup’s total funding to $182 million.
News aggregation apps seemed to everywhere a few years ago, and while they haven’t exactly disappeared, they didn’t turn into unicorns, with many of them acquired or shut down.
However, Vice President of U.S. Marketing Fabien-Pierre Nicolas told me that SmartNews has a few unique advantages. For one thing, it uses machine learning rather than human curation to “thoughtfully generate a news discovery experience” that’s personalized to each user.
Secondly, he said that many news aggregators treat the publishers creating the content that they rely on “like a commodity,” whereas SmartNews treats them as “true partners.” For example, it’s working with select publishers like Business Insider, Bloomberg, BuzzFeed and Reuters on a program called SmartView First, where articles are presented in a custom format that gives publishers more revenue opportunities and better analytics.
Lastly, he said SmartNews has focused on only two key markets — Japan (where the company started) and the United States. And it sounds like one of the main goals with the new funding is to continue growing in the United States.
Nicolas also suggested that there are some broader trends that SmartNews is taking advantage of, like the fact that the shift to mobile news consumption is still underway, particularly for older readers.
And then there’s “the loss of trust in some news sources — political news, especially,” which makes SmartNews’ curated approach seem more valuable. (It also recently launched a News From All Sides feature to show coverage from different political perspectives.)
As for monetization, he said SmartNews remains focused on advertising.
Yes, there’s a growing interest in subscriptions and paywalls, which is also reflected in subscription news aggregators like Apple’s News+, but Nicolas said, “Eighty-five to ninety percent of Americans are not subscribing to news media. We believe those 85 to 90 percent have a right to have quality information as well.”
Update: Also worth noting is that SensorTower says SmartNews has been downloaded 45 million times since the beginning of 2014, with 11 million of those downloads in 2019.
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