News aggregator, SmartNews, recently closed a $92 million fundraising round at a $1.2 billion valuation. The funding round was led by ACA Investments and Japan Post Capital Co. Other participants include D.A. Consortium, Dentsu, and Global Capital Partners.
SmartNews’ success proves that there is still investor appetite for news aggregation platforms. Several years ago, apps like Pocket and Flipboard gained popularity quickly. Yet, most did not reach billion-dollar valuations, and many have since been deactivated or acquired.
SmartNews has now raised $182 million in total, which includes a $28 million round that closed in August. Leaders at the startup attribute the company’s fundraising success to the unique, defining characteristics of their platform, which relies on machine learning algorithms to create personalized news feeds for every user.
Why SmartNews is Different
SmartNews offers several advantages over existing news aggregator apps. While most other platforms rely on human curation, SmartNews uses AI to create personalized feeds. The app also provides two different reading modes, Web mode or Smart mode, the latter of which enables users to read any article offline in a simple, clean format.
Additionally, SmartNews works to build mutually beneficial partnerships with content publishers. For example, the startup works with BuzzFeed and Bloomberg to provide better revenue opportunities and analytical insights around readership. Overall, SmartNews pulls content from over 300 publishers.
Users have downloaded the app more than 40 million times to date, despite it only being available in Japan and the U.S. SmartNews’ profits come primarily from advertising as the app is free for users. Google named SmartNews The Best App of the Year in 2013, and Apple included it in its Best of 2013 list.
The Rise of Mobile News Consumption
SmartNews is capitalizing on the rising mobile news consumption trend. In 2017, 85 percent of U.S. adults got news on their smartphones, which represented a 13 percent increase over 2016. Overall, mobile news consumption is up 300 percent over the last five years.
Much of the recent aggregate growth is due to rising participation in older adults. 79 percent of adults between the ages of 50-64 now get news on mobile. In 2013, less than half of the same segment consumed news on mobile devices. However, younger generations still beat older adults in overall mobile readership.
These stats have important implications for publishers. In many cases, news sites should be designed for mobile consumption first, rather than oriented primarily for desktop consumption.
Fighting ‘Fake News’
Another important topic related to mobile news consumption is how publishers are fighting the spread of misinformation. “The major new challenge in reporting news is the new shape of truth,” said Wired co-founder Kevin Kelly. “Truth is no longer dictated by authorities, but is networked by peers.”
In March, Google launched a new set of tools under the Google News Initiative. The program released a tool to help news organizations tag legitimate stories that debunk misinformation. Another resource enables journalists to compile all stories with this tag so that they have a clearer path to the truth.
However, the battle against “fake news” is far from over. With a presidential election on the horizon, we’re likely to see the conversation gain momentum in the coming months.