"Microsoft has picked up a minority stake in Singapore-based Affle Holdings. This investment will help us leverage Microsoft's brand and expand to countries where we still do not have a presence," Affle Chief Executive Officer Anuj Khanna said.

In turn, Affle's SMS 2.0 service will help boost the usage of many of the Windows Live services and MSN content on cell phone, and also create a large volume of new mobile advertising inventory, he added.

Asked about the size of investment made and the size of the stake picked up, Khanna declined to comment.

Affle will use the proceeds for building operations and expanding its presence in the country and overseas.

"We have a office in Delhi and now we are looking at Mumbai and Bangalore. Also, we are running test pilots in the US, the UK and Australia and expect to launch services by the end of this year or early next year," he said.

Affle, which has about 100 firms on board as advertisers, has a presence in India, Singapore, Malaysia and Thailand.

This is the second round of funding for the company.

Earlier, the company had raised about USD 10 million through individual investors and venture capitalists.

Bullish on the Indian market, Affle is also eyeing a 50 per cent market share in the next two years in the display ads vertical.

"India has a huge number of mobile phone users and despite the slowdown, we do not expect the numbers to come down. We expect to capture 50 per cent market share in display ads and banner ads on wap sites (websites on mobiles)," Khanna said.