Why Nandan Nilekani’s venture fund is doubling down on Kuku FM


Sohini Mitter

33 reads

Sohini Mitter

33 reads

Fundamentum Partnership, the VC fund floated by Nandan Nilekani, is betting big on vernacular audio-streaming platform Kuku FM. The VC firm believes Kuku FM will cater to the next 400-500 million Bharat users in a segment where no large global player ‘has already won India’.

October 09, 2023


Key Takeaways

  • Kuku FM is nearing ~3 million active paying subscribers and has hit an ARR of $15 million for FY24
  • 90% of its users pay for non-fiction content around education, job preparation, personal finance, self-help, parenting—things they believe can add value to their lives
  • Fundamentum Partnership is betting big on Kuku FM that it reckons has captured a whitespace with an India-centric monetisation approach
  • Kuku FM is converting 11% of its app downloads to paid subscriptions—a rate nearly 3x the industry benchmark

Last year, Kuku FM founders were approached by an airport security guard who identified them from their company t-shirts. The guard happened to be a paid subscriber (and fan) of the indigenous audio-streaming platform and was keen on a picture with the founders. For Prateek Jain, principal at Nandan Nilekani-backed VC firm Fundamentum Partnership, this instance was proof that Kuku FM had found a captive audience in India’s working class.

This segment includes not just aforementioned security guards but also delivery boys, tailors, garment makers, construction workers, drivers, shopkeepers, and street vendors, all of whom rely on Kuku FM’s vernacular language content to be informed, inspired, and entertained while they go about their repetitive jobs. So much so that Kuku FM actually sees a 30% drop in listenership on weekends, when its users probably switch to watching videos.  

“When we were doing due diligence on Kuku FM for the first time, we spoke to a golgappa wala who starts his day at 4 AM and opens his stall at 1 PM. In the hours between, he can’t look at a screen, but can listen to audio content that makes him feel like he’s utilising the time and getting some value-add,” Jain tells The CapTable.

As part of Fundamentum, which offers patient capital to growth-stage startups, Jain has led two rounds of funding totalling ~$20 million into Kuku FM in the last 12 months. Since September 2022, even as most startups continue to grapple with the funding winter, Kuku FM closed its Series B1 ($22 million) and Series C ($25 million) rounds, taking total VC investments in the Mumbai-based firm to $72.3 million.

The latest round in September 2023 was co-led by Fundamentum, the International Finance Corporation (IFC), and Temasek-backed Vertex Ventures. Why are VCs boarding the Kuku FM bus?

Cracking the Bharat user

While Kuku FM has been around since 2018, it’s only in 2021 that it began its monetisation journey. It is nearing ~3 million active paying subscribers and has hit an annual recurring revenue (ARR) of $15 million (~Rs 124 crore) for the year ending March 2024. In the last fiscal, it grew its topline by almost 10X to ~Rs 49 crore. However, it also saw losses more than doubling to Rs 116 crore due to the company’s high marketing spends.

Despite this, Cofounder & CEO Lal Chand Bisu believes that Kuku FM has cracked its unit economics, especially around Hindi language content, and understands the psyche of the paying customer in Bharat.

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