Pocket FM Secures $103M to Fuel Global Expansion of Audio Platform

Pocket FM Secures $103M in Series D Funding, Expands into New Markets

Pocket FM, a leading audio platform based in India, has recently announced a successful Series D funding round, raising an impressive $103 million. The round was spearheaded by Lightspeed Ventures, with additional participation from Stepstone Group. This latest investment brings the company’s total funding to $196 million, resulting in a valuation of $750 million.

A Unique Approach to Audio Content

Pocket FM’s primary offering revolves around short, episodic audio series. While some content is available for free, users can unlock additional episodes by purchasing virtual coins. This pay-as-you-go model has proven to be more effective for the company than a traditional subscription-based approach, as it encourages repeat purchases and user engagement.

Investing in the Creator Economy

In addition to its audio platform, Pocket FM is also making significant investments in the creator economy. The company recently announced plans to allocate $40 million to its writing platform, Pocket Novel, which has already attracted over 90,000 writers since its launch in February 2020. Pocket Novel operates on a similar coin-based unlocking system, although there is currently no integration between the two platforms.

Impressive User Engagement and Revenue Growth

Pocket FM boasts an extensive library of over 100,000 hours of content and more than 400,000 episodes across various genres and languages. The company’s expansion into the U.S. market in 2021 has proven to be a significant revenue driver, contributing $100 million to its annual recurring revenue (ARR) of $150 million. Additionally, the platform has seen high levels of user engagement, with global users spending an average of 115 minutes on the app, and U.S. users spending an average of 135 minutes.

Embracing Generative AI and Supporting Creators

Pocket FM is actively exploring the potential of generative AI to enhance its platform. The company is currently testing a tool that allows writers in the U.S. to convert their written works into audiobooks using AI-powered voices provided by Eleven Labs. Furthermore, the startup is developing internal AI tools to help creators write their stories more efficiently.

While the platform provides incentives for writers to hit their goals, the use of AI tools may lead to an influx of mediocre content. However, Pocket FM’s co-founder Rohan Nayak believes that it is the platform’s responsibility to filter out the noise and showcase high-quality content to listeners.

“You need to filter out the noise and make sure you filter out the high-quality content which you then make available to listeners. The way we see AI at least in our context, it’s more about how you use AI to unlock productivity and efficiency gains for creators for writers,” he said.

Future Expansion and Investment Opportunities

As Pocket FM continues to scale, the company is already in discussions with investors for its next funding round. The startup has received significant investor interest, with reports suggesting that Abu Dhabi’s sovereign wealth fund ADIA has held talks for a potential mega funding round.

Lightspeed partner Harsha Kumar emphasizes the importance of catering to local tastes in different geographies as Pocket FM expands globally. She also highlights the crucial role of recommendation algorithms in ensuring parity among creators on the platform.

With a current team of 800 employees, Pocket FM plans to add an additional 500 personnel across the globe as it focuses on scaling its operations. While the company is not yet profitable, it boasts a high gross margin and is well-positioned for continued growth and success in the rapidly evolving audio content market.