Billion Dollar Unicorn: Hike Is The Latest Entrant From India

According to eMarketer, the global mobile phone messaging apps user base grew 32% over the year to 1.4 billion consumers in 2015 and is expected to grow to 2.19 billion users by the year 2019. Over-the-top (OTT) mobile messaging apps such as WhatsApp, Facebook Messenger, and WeChat, have shown heavy usage in Asia-Pacific, which accounts for 58% of the world’s messaging app population. Latin America has the biggest usage with 68.1% of mobile internet users using a mobile messaging app once a month. India’s home-grown service Hike is the latest member to join the Billion Dollar Unicorn club in the sector.

Hike’s Offerings

New Delhi, India-based Hike was founded in 2012 by Kavin Bharti Mittal, the son of the founder of India’s leading telecom operator Airtel. Many expected Kavin to follow in his father’s footsteps under the Bharti Enterprise. In 2011, Kavin did so, but with a difference. He led Bharti Enterprises into a joint venture with Japan’s Softbank Corp to offer mobile internet services through a 50:50 partnership. He leveraged the entity to enter the OTT messaging business by launching the Hike app in 2012.

The app was well received in India and as of January this year claimed to have more than 100 million users with 95% of them based out of India. 90% of the user base is aged under 30 years and the app sees an exchange of over 40 billion messages per month. Compare that to WhatsApp’s 1 billion users globally, of which 100 million are estimated to be based out of India – clearly Hike is a big competitor.

But Hike has made a big presence in the Indian market by customizing its offering to the local flavor. The company realizes that the country still has over three quarters of its mobile phone users who use feature phones instead of smart phones. To reach out to this segment, Hike has a feature that allows users to send a free SMS instead. Other features include a privacy option so a user can hide chat messages on their phone, a ‘last seen’ feature that only friends can have access to and a push-to-talk voice messaging service so the user does not have to type all messages. Last year, Hike also launched the ability to call users for free over Wifi using the app.

It has also integrated mobile games, a news service, and is currently beta testing a coupon service to generate more revenues. Usage across these services appears to be promising as well. Games attract more than 100 million play sessions per month with peaks of 20-25 million per day, and the news feature has over 50 million users accessing more than 1.5 billion stories a month.  

Hike’s Financials

Hike does not give out details on its financial performance. It does earn revenues from the sale of virtual goods including emoticons and stickers, but the value is not known. It has raised $261 million in funding so far from investors including Adam D’Angelo, Aditya Agarwal, Bharti Enterprises, Foxconn Technology Group, Matt Mullenweg, Ruchi Sanghvi, SoftBank, Tencent Holdings, and Tiger Global Management. Its last round of funding was held last month when it raised $175 million in a round led by Foxconn Technology Group and Tencent Holdings at a valuation of $1.4 billion. Hike plans to use the newly raised funds to invest in services, people, and expansion.

The Indian mobile Internet market is facing a transformative change this year. Earlier last week, India’s business powerhouse The Reliance Group launched the country’s first and the biggest 4G network – Jio. The service has been launched at a heavy discount offering customers three months of free services followed by free calls and data plans with claims that it will charge Rs. 50 (~$0.75) per gigabyte of data. Consumers and the mobile apps like Hike will surely benefit from these reduced data costs.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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Photo credit: Alan Levine/Flickr.com.