KDDI, Jafco Invest in Japanese Newsreader App Maker Gunosy

Jun 23, 2014 1:44 am ET

(Updates with Gunosy announcement in second paragraph.)

June 23 (Bloomberg) -- KDDI Corp. led a 1.2 billion yen ($11.8 million) round of investment in Gunosy Inc., the Japanese developer of a newsreader application for smartphones and tablets.

Jafco Co., the nation’s biggest venture-capital firm, and Tokyo-based B Dash Ventures Inc. joined KDDI in the deal, Gunosy said in a statement on its website. KDDI is making its second investment in Gunosy, founded in 2012, following an initial funding round in March, according to the statement.

KDDI, Japan’s third-largest wireless carrier by market value, has been making investments in mobile app developers as competition for new subscribers intensifies amid a declining population. Gunosy’s application, which presents news content from more than 50 Japanese media and divides them into customizable categories, has been downloaded more than 3 million times since it was introduced in January 2013.

Gunosy is the second-most popular news application on Apple Inc.’s Japanese app store and on Google Play, after software developed by Yahoo Japan Corp., according to data from App Annie Ltd. this month. Gunosy targets 100 million downloads globally in three years.

Jafco shares rose as much as 4.1 percent in Tokyo trading, while the benchmark Nikkei 225 Stock Average advanced 0.1 percent. KDDI fell 1 percent as of 2:42 p.m.

Hiroki Miyakawa, a spokesman for KDDI, confirmed the carrier invested in Gunosy while declining to disclose the amount. Yukari Yokoo, a spokeswoman from Jafco, declined to comment, while B Dash Ventures didn’t immediately respond to an e-mail seeking comment.

Mobile Games

Led by co-Chief Executive Officers Shinji Kimura and Yoshinori Fukushima, Gunosy competes with SmartNews Inc. in Japan. The company introduced an English-language app in the U.K. in April and entered the U.S. last month, challenging Palo Alto, California-based Flipboard Inc.

Gunosy, based in Tokyo, plans to add about 50 employees to its 30-strong workforce over the coming year, Kimura said in a June 13 interview.

Flipboard, a smartphone and tablet application that aggregates content from Facebook Inc., Twitter Inc., magazines and newspapers, had more than 85 million users worldwide as of September last year, according to its website.

KDDI added 494,600 subscribers in March, trailing customer inflows at SoftBank Corp. and NTT Docomo Inc., according to the latest data from the three carriers. KDDI also owns a 5.1 percent stake in Gree Inc. and 4.3 percent share in Colopl Inc., two Japanese makers of mobile-phone games, according to the companies’ latest financial reports.