In first India deal, Xiaomi leads $25M round for music/movie streaming firm Hungama

Xiaomi has furthered its push into India after completing its first investment in the country. The Chinese smartphone firm today announced it has led a $25 million round for Hungama, a video and music streaming service that claims 65 million users, and that it will integrate the company’s services into its content platform in India “in the near future.”

Xiaomi has made a concerted effort to gain marketshare in India’s fast-growing smartphone market since it began selling there in 2014. It joined the government’s Make In India program and took strategic investment from top businessman Ratan Tata, and has long said on record that it would invest in startups that complement its business in India.

“Xiaomi has been an Internet company from the very start. We think of smartphones as a platform for us to deliver Internet services, and this includes content,” Xiaomi VP Hugo Barra said in a statement. “We are investing in Hungama not only to start integrating content into our smartphones, but also to grow together with them and deepen our understanding of the content sector in India.”

While Xiaomi has played hard in India, it appears to have found the going tough, with plenty of competition in the sub-$500, sub-$300, and sub-$150 price brackets it plays in. It claimed a best-yet one million sales in Q3 2015, contrary to a more pessimistic outlook from some industry analysts, but, either way, India represented just a small portion of its 70 million global sales last year — which, it should be noted, came in below Xiaomi’s own target.

Existing Hungama investors also participated in the deal, including Intel Capital, Bessemer Venture Partners and billionaire investor and trader Rakesh Jhunjhunwala. Intel Capital and Bessemer Venture Partners provided the company’s last funding, a $40 million raise in 2014, while the former invested an undisclosed sum in 2012.

One year ago we reported that Hungama, which started out as a marketing and communications agency before pivoting to entertainment in 2009, was raising a massive $100 million round to compete more even-handedly with well-funded, newer arrivals like Saavn and Gaana. Hungama CEO Neeraj Roy today confirmed to TechCrunch that the company had been in talks to raise that round, but he said the financing never happened as Hungama picked a different route.

Roy stressed Hungama, which claims to have over 8,000 movies on its platform, has “tangible revenues” and “is not burning cash” like its rivals, he suggested. He further stressed that his company is focused on “raising capital from the right people and on the right terms.”

“We are very excited to be partnering with Xiaomi, as we are extremely aligned in the way we see digital media becoming mainstream on mobile devices,” Roy added via a statement. “With this investment, we intend to further strengthen our movie and TV services.”