The nimble mobile advertisers

DIPPAK KHURANA, FOUNDER, VSERV DIGITAL SERVICES PVT. LTD.

In 2010, when Dippak Khurana and Ashay Padwal took the entrepreneurial plunge with Vserv Digital Services, they carried with them over a decade of experience in the Internet and mobile world. “My first exposure to this space was in 1996, and since then I’ve seen an explosive growth in mobile opportunities,” says Khurana. For example, between 2003 and 2009, when he was working with Mauj (People Group), he was exposed to the first 100,000 mobile Internet customers in emerging markets and observed their consumption patterns closely. Such experiences, he claims, led to several turning points when building Vserv into a successful mobile advertising technology provider.

Setting up the foundation

Among the foremost insights the founding team had was about focusing on how and when the market will expand, rather than on leveraging innovation and technology in this space. “We chose mobile because we noticed that in the coming years, particularly in the emerging markets, a smartphone will no more be an expensive gadget as compared to a laptop or an iPad,” adds Khurana.

Secondly, they were particular that the founding team should carry a good amount of expertise in business and technology.  “If you notice companies like Naukri and Hungama, the founding team has good expertise in business and marketing but not in technology. We didn’t want this to happen so Padwal and I made a conscious choice to bring our varied expertise (in business and technology) on board when founding Vserv,” he notes.

A third aspect was in the product development space. Initially, while Vserv was positioned as a video advertising platform, soon the founders realised that this model would take a longer period to deliver the desired returns. Thus, in three months, they were relooking at dissolving certain aspects of their business, recreating the profile of people they wanted to hire, and building the business from scratch.

“During our second attempt, we clearly identified the segments we wanted to tap into; app developers, publishers and marketers. And this we did one segment at a time,” recalls Khurana. In simpler words, Vserv first developed a platform for developers to create and launch their apps.

Then, it extended the platform to publishers and eventually to marketers. “Once we gained a foothold in these three segments, we started seeing a lot of data being collated on mobile Internet customers.  Our next logical step was to extend this offering to telecom operators,” he states. For example, a consumer first signs up with the telecom operator, and then gains access to the app on the platform. The app, in turn, gathers all information about the customer, which is then sold to the marketer to help them create and promote targeted ads. Currently, the company has data from over 120 million mobile Internet users in India and over 500 million users across emerging markets.

High cash burn a no-go

Vserv raised three rounds of funding amounting to US $22 million from IDG Ventures, Maverick Capital and Epiphany Ventures, the latest round being in March 2015.  While the money from the first two rounds were channelised towards strengthening the foundation, the third round was channelised towards leveraging its business in South East Asia. And, Khurana points out that the funds from the latest round will also go into the product and engineering front.

When asked about their fund raising strategy, Khurana shares an anecdote from Marc Andreessen, the renowned Silicon Valley entrepreneur-turned-investor.  In late 2014, Andreessen shared tweets about eight things that could potentially kill a startup. One among them was, ‘high cash-burn startups almost never survive down rounds. Vaporize.’ Meaning, raising additional rounds of funding (unnecessarily) never helps, you only end up depending on it more. This, Vserv’s founding team caught on to, and they ensured that they were sensitive about how much capital they want to infuse into the business. “You need to strike a balance between the age of the company and the capital you infuse into the company. For example, in 2013, we had the flexibility to raise US $10 million but we chose to take only US $4 million,” cites Khurana.

Further expanding into emerging markets

Since founding, Khurana and Padwal have had a laser-like focus on the emerging markets, with a deep focus on India. “The use of data is still evolving in these markets, as compared to the U.S. where there are companies like BlueKai which collate data, model it and share it as reports with companies,” reasons Khurana. Currently, the company has a presence in markets such as Middle East, Africa and India.

Going forward, its focus will be on improving its product offering and extending the number of features it offers to its customers (the app developers, marketers, publishers and telecom operators). With a year-on-year growth rate of close to 80 per cent, it’s just a year away from achieving its revenue target of US $100 million.


WHAT NEXT? 

Improve its product offering and extending the number of features offered to customers (the app developers, marketers, publishers and telecom operators)

Achieve a revenue target of U.S. $ 100 million by 2016