“Lokal App” Unique Proposition: Tapping India’s Linguistic And Cultural Diversity For Growth.

India’s diverse linguistic and cultural landscape has become a favorite theme among entrepreneurs in the regional language internet ecosystem. Despite higher internet penetration in small-town India, habits change slowly, making it a unique proposition for startups like Bengaluru-based Lokal to disrupt traditional regional language mainstream media.

Lokal’s Distinct Approach

Lokal takes a hyperlocal approach, targeting users rooted to their locations. According to Pasha, Lokal’s co-founder, more than 80% of its users don’t travel to other parts of the state or adjacent districts, and over 90% of their consumption occurs locally. Founded in 2018 by Jani Pasha and Vipul Chaudhary, Lokal aggregates district-level hyperlocal information, user-generated content, and SMB ads, offering district-level news, jobs, classifieds, matrimonial ads, weather updates, and contact information of local authorities.

Rapid Growth and Funding

Lokal’s success is evident with over 40 million downloads, even without an iOS app. To reach over 150 million users within two years, Lokal secured INR 120 Crore ($15 million) in Series B funding from investors like Global Brain and Sony Innovation Fund, along with existing investors like India Quotient. The total funding raised now amounts to INR 225 Crore (~$27 million). The focus is on expanding the user base in existing districts and launching new categories and product capabilities, including AI-powered moderation and personalized content recommendations.

Lokal’s Trust Factor

Unlike other news apps, Lokal focuses on replicating the trust factor that local leaders and influencers have within their communities. This emphasis on hyperlocal trust has contributed to Lokal’s significant growth from 2 million users in 2019 to 40 million users today. The app curates information that users typically get from newspapers but in a constantly updated and on-the-go digital format. Lokal relies on a network of stringers and local reporters, akin to regional language newspapers, who carry a high trust factor among regional language readers.

Monetization Challenges

Monetization remains a challenge for startups relying on ads, but Lokal has adopted content-led digital marketing solutions, involving small and medium businesses (SMBs) and local brands. The app’s revenue from operations surged from INR 14.4 Lakh in FY20 to INR 2.46 Cr in FY21 and further to INR 8.4 Cr in FY22. However, the company’s losses also increased from INR 9.6 Cr in FY20 to around INR 39 Cr in FY22. Major cost outlay comprises employee expenses, expected to rise as the product and tech teams expand.

A Crowded Market and the Pursuit of Profitability

In the competitive regional language social media space, Lokal faces challenges from platforms like ShareChat, Public App, and Koo. While profitability is possible in the classifieds space, startups need substantial capital for user acquisition, tech platform development, and scaling up. Large language models like ChatGPT have added complexity to content-centric platforms. Nonetheless, Lokal is optimistic, keeping an eye on the generative AI space and believing that its regional language content library can build models for India and ‘Bharat.’

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Investor Confidence in Lokal’s Growth

Despite the overall funding downturn, Lokal’s recent fundraising reflects investor confidence. The startup is already profitable in Andhra Pradesh and Telangana, with a strong presence in most districts. Lokal’s success is measured not only by user base but also by the speed at which classified listings receive responses, indicating organic traction due to hyperlocal trust.

Replicating Success and Solving Marketing Challenges

Lokal aims to replicate its AP and Telangana model swiftly in new states. While word-of-mouth has been crucial for its growth in these regions, the challenge lies in acquiring new users through marketing campaigns in new locations to achieve critical mass before turning on monetization levers. The new funding will undoubtedly aid Lokal in acquiring new users, but it must tackle the marketing problem effectively while competing for the same ad pie.

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