SmartNews said to plan December Tokyo IPO as valuation craters

SmartNews is planning an initial public offering in December at a fraction of its previous valuation, according to people familiar with the matter, a sign of the news aggregator’s business being decimated by artificial intelligence.

The Tokyo-based company is seeking a market value of about ¥50 billion ($317 million) in the potential IPO, said the people, who asked not to be identified as the information is private. That compares with a valuation of $2 billion in a Series F funding round in 2021. Deliberations are ongoing, and details such as the timing and valuation could change. A representative of SmartNews said by email that the company reviews its capital strategy as appropriate but no decisions have been made at this time.

SmartNews also considered a trade sale, but failed to find a buyer at its target valuation, the people said. It previously considered a listing as soon as this month, people familiar with the matter have said. The company has hired Mitsubishi UFJ Morgan Stanley Securities and Nomura Holdings as lead managers for the deal and gauged global investors’ interest, it was reported last year.

SmartNews’ rocky road to the IPO underscores the mismatch between the lofty valuations of Japan’s unlisted startups and investor demand. Among unicorns in the country, KKR-backed SmartHR has delayed its listing as investors viewed the company’s targeted valuation as too high, people familiar with the matter have said. 

Founded in 2012, SmartNews was especially impacted by the rise of AI, which has become the gateway to news for many people. The company uses algorithms to sift through global content and provides access to news from more than 3,000 media sources. Since cutting 40% of its US and China workforce in 2023, SmartNews has been bolstering its advertisement business and widening to a subscription service to diversify revenue.