VerSe Innovation, founded in 2007 by Virendra Gupta, along with co-founders Umang Bedi and Shailendra Sharma, is a Bengaluru-based technology company behind platforms like Dailyhunt (a news aggregator) and Josh (a short-video app). The company focuses on vernacular content, catering to India’s non-English-speaking audience, with over 350 million users across 14 Indian languages.

Its business model spans digital advertising, subscriptions, and influencer marketing, operating in the competitive media and entertainment sector. VerSe has raised $2.01 billion over 17 funding rounds, achieving a valuation of $5 billion in 2022, later revised to $2.9 billion in 2024.

The claim suggests that Virendra Gupta and Umang Bedi engaged in fund manipulation by securing investments from Chinese and global investors to inflate VerSe’s valuation, despite a weak revenue cycle in vernacular content and digital media.

Additionally, it is alleged that VerSe collaborated with Builder.ai in a “round-tripping” scheme between 2021 and 2024 to artificially boost revenue figures, with plans to launch a public issue to further capitalize on this narrative and mislead investors.

Funding from Chinese and Global Investors

Chinese Investors: VerSe has received funding from ByteDance (the parent company of TikTok), a prominent Chinese investor, as part of its $129 million raised for Dailyhunt across eight rounds. ByteDance’s investment aligns with VerSe’s focus on short-video platforms like Josh, launched in 2020 as a competitor to TikTok after its ban in India.

The involvement of Chinese capital, particularly from ByteDance, has drawn scrutiny due to geopolitical tensions and India’s restrictions on Chinese apps, raising questions about the strategic intent behind these funds.

Global Investors: VerSe has attracted a range of high-profile global investors, including:

• Canada Pension Plan Investment Board (CPP Investments): Led an $805 million round in 2022, the largest investor in VerSe.
• Ontario Teachers’ Pension Plan Board: Participated in the 2022 round.
• Luxor Capital: Part of the 2022 funding.
• Sequoia Capital: Early investor in VerSe.
• Goldman Sachs: Backed VerSe in multiple rounds.
• Google: Invested in VerSe, aligning with its digital media focus.
• The Carlyle Group, Advent International, Sofina, Qatar Investment Authority (QIA), B Capital Group, IIFL Wealth, Siguler Guff, Baillie Gifford, Franklin Templeton India, Alpha Wave Global: Participated in various rounds, with investments ranging from equity to debt (e.g., a $6.02 million debt round in February 2024).

Analysis of Funding Strategy: The claim that VerSe “converted” money from Chinese investors to global investors is ambiguous and lacks direct evidence. It may imply that early Chinese investments (e.g., ByteDance) were used to establish credibility, attracting larger global investors to fund expansion.

VerSe’s funding trajectory shows a shift from smaller, early-stage rounds (e.g., $200 million in 2020) to massive rounds in 2022, suggesting a deliberate effort to scale rapidly. However, there is no concrete evidence in the provided sources that funds were illicitly “converted” or misappropriated.

The diversity of investors, including reputable global funds, indicates strong market confidence, though it does not rule out scrutiny over how funds were utilized or reported.

Revenue Cycle in Vernacular Content and Digital Media

Business Model and Revenue Challenges:

• Core Platforms: Dailyhunt and Josh rely on advertising (ad tech), subscriptions (Dailyhunt Premium), and influencer marketing (VerSe Colab). The company reported revenue of ₹1,809 crore ($217 million) in FY23, a 57% increase from ₹1,151 crore in FY22, but saw a 13% decline to ₹1,261 crore ($151 million) in FY24 due to a sluggish advertising market.
• Vernacular Content Challenges: The vernacular content market, targeting Tier II and III cities in India, is fragmented and faces monetization hurdles. While Dailyhunt has 300 million monthly active users (MAUs) and Josh has 150 million, converting this user base into consistent revenue is difficult due to low ad spend in non-English markets and competition from global giants like Google and YouTube.
• Financial Health: VerSe reported losses of ₹401 crore in FY20, with net burn reduced from ₹3,500 crore to ₹800 crore by FY24 through cost-cutting measures, including 350 layoffs in May 2024. The company aims to break even by late 2025, supported by acquisitions like ValueLeaf to bolster ad tech.

Critique: The claim that vernacular content “doesn’t have a strong revenue cycle” is partially valid. The advertising market for vernacular audiences is less mature than English-language markets, and VerSe’s FY24 revenue dip reflects this vulnerability. However, the company’s growth in user base, strategic acquisitions (e.g., ValueLeaf, Magzter), and expansion into the Middle East (e.g., UAE, Saudi Arabia) demonstrate efforts to diversify revenue streams.

The subscription model for Dailyhunt Premium and Josh’s monetization (crossing $100 million ARR) show progress, though profitability remains elusive. The allegation of a weak revenue cycle oversimplifies VerSe’s complex business model, which balances high user engagement with long-term monetization goals.

Alleged Round-Tripping with Builder.ai

Allegations:

• Between 2021 and 2024, VerSe Innovation and Builder.ai allegedly engaged in “round-tripping,” a practice where two companies bill each other for similar amounts to inflate revenue without delivering actual services. Reports suggest VerSe paid Builder.ai $80 million for services like app development and cloud deployment, while Builder.ai paid VerSe’s subsidiary Quark Media Tech $53 million for advertising, with nearly $60 million in reciprocal payments flagged as suspicious.
• Bloomberg reported that these transactions were timed and staggered to avoid detection, with many allegedly lacking proof of service delivery. Builder.ai, facing bankruptcy in 2025, reportedly overstated its 2024 revenue ($220 million claimed vs. $50 million actual), raising questions about similar practices at VerSe.
• A post on X further amplified these claims, alleging that VerSe and Builder.ai exchanged fake invoices for “marketing services” and “app development” with “zero real services delivered.”

VerSe’s Defense:

• Umang Bedi, VerSe’s co-founder, has vehemently denied these allegations, calling them “factually incorrect, baseless, defamatory, and misleading.” He provided evidence of legitimate transactions, including emails, invoices, and project plans on Jira, asserting that all services were rendered and verified by third-party audits (conducted by a Big Four firm) and board oversight.
• Bedi explained that VerSe’s $80 million spend with Builder.ai covered hyperscale cloud deployment, system migration, and custom app development, while Builder.ai’s $53 million payment to VerSe was for advertising with full campaign tracking (UTM tags and delivery reports). He attributed the end of the partnership to cost-cutting, as VerSe shifted to cheaper cloud providers.
• VerSe’s Chief Financial Officer, Sandip Basu, resigned in 2025, citing health reasons, and Deloitte exited as auditor, reportedly due to routine rotation under Indian regulations, not misconduct. Bedi clarified that revenue reporting changes followed Ind AS 115 accounting standards, denying any wrongdoing.

Builder.ai Context:

• Builder.ai, a London-based AI startup, collapsed in 2025 after inflating its revenue and misrepresenting human-written code as AI-generated. It owed $85 million to Amazon and $30 million to Microsoft for unpaid cloud services, with creditor Viola Credit seizing $37 million. U.S. prosecutors are investigating, and the company faces bankruptcy.
• The round-tripping allegations emerged amid Builder.ai’s broader financial misconduct, casting VerSe in a negative light due to their business ties. However, VerSe maintains that its transactions were legitimate and unrelated to Builder.ai’s internal issues.

Analysts Found:

• Evidence of Round-Tripping: The Bloomberg report and X post provide serious allegations but lack publicly available primary documents (e.g., invoices, contracts) to confirm that no services were delivered. VerSe’s detailed rebuttal, including evidence of project plans and audits, suggests a more complex relationship than pure round-tripping. The timing and value of payments ($80 million vs. $53 million) are not identical, weakening the claim of exact reciprocity. However, the proximity of transactions and Builder.ai’s confirmed financial irregularities raise legitimate concerns.
• Motivation: Round-tripping could theoretically inflate VerSe’s revenue to justify its $5 billion valuation in 2022, attracting investors like CPP Investments. Builder.ai’s motive was likely similar, as it misled investors (e.g., Microsoft, QIA) about its revenue. However, VerSe’s audited financials and board oversight reduce the likelihood of undetected fraud on a large scale.
• Impact: The allegations have damaged VerSe’s reputation, contributing to a 42% valuation cut to $2.9 billion in 2024. If proven true, round-tripping could lead to legal and regulatory consequences, especially as India tightens AI and financial regulations.

Verse Innovation Plans for a Public Issue

• VerSe is reportedly preparing for an initial public offering (IPO) to capitalize on its growth narrative, with Umang Bedi stating a $100 million revenue target for FY25, driven by acquisitions like ValueLeaf. The company aims to surpass $500 million in revenue and achieve EBITDA positivity.
• The IPO is seen as a move to raise public funds, leveraging VerSe’s user base (350 million) and platforms (Dailyhunt, Josh) to present a compelling growth story. The acquisition of ValueLeaf and Magzter, along with Middle East expansion, supports this narrative.

Allegations of Misleading the Public:

• The claim suggests VerSe’s IPO is a ploy to “fool the industry” by inflating its growth story, potentially hiding weak fundamentals and round-tripping practices. Critics argue that the vernacular content market’s revenue challenges and the Builder.ai controversy undermine VerSe’s valuation and IPO readiness.
• VerSe’s FY24 revenue decline (13%) and historical losses (e.g., ₹401 crore in FY20) fuel skepticism about its profitability claims, especially in a competitive market dominated by Google and YouTube.

Counterpoints:

• VerSe’s cost-cutting measures, including layoffs and reduced net burn (from ₹3,500 crore to ₹800 crore), demonstrate a path to profitability. The ValueLeaf acquisition enhances its ad tech capabilities, a critical revenue driver.
• The company’s user growth (300 million MAUs for Dailyhunt, 150 million for Josh) and expansion into Gulf markets signal scalability, appealing to public investors. Partnerships with 5,000 content publishers in the Middle East and a Guinness World Record for Josh’s engagement further bolster its narrative.
• VerSe’s transparency in addressing round-tripping allegations, backed by audits and board oversight, suggests confidence in its financial integrity. The IPO could provide capital to scale ad tech and subscriptions, mitigating revenue cycle weaknesses.

Experts predicts Risks of IPO:

• Regulatory Scrutiny: India’s evolving AI and financial regulations, including the Digital India Act and SEBI’s oversight of IPOs, could delay or complicate VerSe’s public offering if round-tripping allegations trigger investigations.
• Investor Confidence: The Builder.ai scandal and valuation cut may deter public investors, especially if further evidence of financial irregularities emerges. Foreign investor caution, with 85% of Indian startup funding from abroad, adds pressure.
• Market Dynamics: A sluggish ad market and competition from global players could undermine VerSe’s growth projections, making its $500 million revenue target ambitious.

Critical Evaluation

Strengths of VerSe’s Position ( On Paper)

• Market Leadership: VerSe’s focus on vernacular content taps into India’s growing non-English internet user base (projected to reach 600 million by 2030), offering a unique value proposition.
• Investor Backing: Support from credible investors like CPP Investments and Google reflects confidence in VerSe’s long-term potential, despite short-term challenges.
• Strategic Moves: Acquisitions (ValueLeaf, Magzter) and international expansion demonstrate proactive growth strategies, aligning with IPO preparations.

Weaknesses and Risks:

• Revenue Instability: The 13% revenue drop in FY24 and historical losses highlight vulnerabilities in the vernacular ad market, which may not support a $5 billion valuation.
• Round-Tripping Allegations: While VerSe denies wrongdoing, the Builder.ai connection raises red flags. Even if transactions were legitimate, the perception of impropriety could harm investor trust.
• Regulatory Environment: India’s tightening AI and financial regulations, coupled with global scrutiny of deepfake and financial transparency, could complicate VerSe’s IPO and operations.

Broader Implications:

If proven, round-tripping could erode trust in India’s startup ecosystem, already facing a funding slowdown (early-stage funding dropped from $4 billion in 2023 to $3 billion in 2024).

• Public Trust: An IPO built on questionable financial practices risks harming retail investors, reinforcing calls for stricter regulations like the Digital India Act.
• Vernacular Market: VerSe’s success or failure could shape perceptions of the vernacular content market, influencing investment in Bharat-centric startups.

The allegations against the promoters and the company regarding fund manipulation and round-tripping with Builder.ai are serious but lack conclusive evidence in public sources. VerSe’s funding from Chinese (ByteDance) and global investors (CPP Investments, Google, etc.) reflects a strategic effort to scale its vernacular content platforms, though the revenue cycle remains challenging due to market dynamics.

The round-tripping claims, tied to $60–80 million in transactions with Builder.ai, are contested by VerSe with evidence of legitimate services, but Builder.ai’s collapse and confirmed misconduct lend credibility to skepticism. Experts further says, there is need for a high level Financial audit from the third party but not with the Big 4.

The planned IPO, aiming for $500 million in revenue, is a high-stakes move that could either validate VerSe’s growth story or expose vulnerabilities if regulatory or investor scrutiny intensifies.

To address these concerns, VerSe must enhance transparency, strengthen financial reporting, and navigate India’s regulatory landscape carefully. For investors, the IPO presents both opportunity (large user base, ad tech growth) and risk (revenue volatility, reputational damage). Further investigation into the Builder.ai transactions and VerSe’s financials is needed to clarify the extent of any misconduct. For now, the company’s denials and audited statements provide a counter-narrative, but the shadow of Builder.ai’s collapse looms large.

Recommendations:

• For VerSe: Publish detailed transaction records with Builder.ai to dispel round-tripping allegations and engage independent auditors for pre-IPO due diligence.
• For Investors: Scrutinize VerSe’s revenue sources and ad tech performance, while monitoring regulatory developments in India’s startup ecosystem.
• For Regulators: Accelerate guidelines under the Digital India Act to ensure financial transparency in tech IPOs, protecting public investors.