Tencent-backed audio platform Pocket FM has revived plans to raise fresh capital, targeting $100 million-$120 million at a valuation of $1.5 billion-$2 billion, according to two people familiar with the matter. This marks a second attempt by the company, which had explored fundraising about nine months ago but failed to close the round amid investor concerns over backing a loss-making business.
Mint had earlier reported that Goldman Sachs was advising on the previous mandate. However, the first person said the fundraising process is being relaunched with a new banker.
“Over the past year, Pocket FM has worked on its profitability and turned cash flow positive, improving on its Ebitda margins, following which it relaunched the process,” the second person said. Ebitda is earnings before interest, taxes, depreciation, and amortization.
A spokesperson for Pocket FM, in response to Mint's query, said the company does not comment on "market speculation, fundraising discussions, or specific financial details.”
“The company remains focused on building a strong and sustainable business, and continues to see positive momentum across markets. Any updates will be shared through official channels at the appropriate time,” the spokesperson added.
In a LinkedIn post earlier this month, co-founder and chief executive Rohan Nayak said the company has crossed $400 million in annual recurring revenue (ARR), is now free cash flow positive, and is operating at roughly 5% Ebitda margins.
For FY25, Pocket FM reported revenue of ₹1,768 crore, up from ₹1,051.97 crore a year earlier, while losses narrowed to ₹165 crore from ₹208 crore in the previous fiscal.
Nayak attributed the acceleration in growth to the company’s push into AI-led storytelling. Pocket FM took six years to build its first $200 million in revenue, while the next $200 million came within 12 months, aided by AI-driven tools, he said.
Founded in 2018 by Nayak, Nishanth K.S. and Prateek Dixit, the company has shifted from a subscription-led model to a freemium approach that blends pay-per-episode purchases with premium plans.
Users can access content for free and wait for episodes to unlock over time, or buy in-app coins to access more content instantly. The company also offers subscription plans that provide an all-access experience, typically with fewer advertisements and longer listening windows for heavier users.
“Investors would assess Pocket FM's risk exposure in light of its status as an intermediary under the Indian IT laws and display of necessary disclaimers to ensure protection under safe harbour and from any user claims,” said Rashi Bharadwaj, partner at CMS Induslaw.
“From a legal and regulatory perspective, the primary issue for any investor would be ownership and control of intellectual property in the platform's content….This would require a review of underlying agreements to determine ownership of intellectual property, along with the scope, exclusivity and duration of such rights.”
The company has expanded beyond India and is now present in more than 20 countries, including the US and parts of Europe. Pocket FM was last valued at around $750 million when it raised $103 million in a Series D round in March 2024, led by Lightspeed Venture Partners and StepStone Group.
That round saw its valuation nearly double from roughly $390 million in the previous raise and took the total funding raised by the company to about $196.5 million. Its other investors include Goodwater Capital, Tanglin Venture Partners, Naver, Times Internet and Tencent.
In October, Mint reported Pocket FM’s plan to raise $100-150 million in a mix of primary and secondary capital to fund global expansion and deepen investments in its AI stack.
Chief operating officer Lalit Gangwar told Mint last week that said users in both India and the US are becoming increasingly comfortable with microtransactions, while the platform is also seeing deeper adoption of AI across content creation workflows.