Chinese media firm ByteDance taps Jack Ma in mega funding round

October 25, 2018 09:01
Alibaba founder Jack Ma has reportedly joined the mega funding round of ByteDance, the company behind news aggregator Toutiao and video platform Tiktok. Photo: Reuters, CGTN

Fast-growing Chinese media startup ByteDance, the company behind news aggregator Toutiao and video platform Tiktok, has raised at least US$2.5 billion in a mega funding round, Chinese tech news website AWTMT reports, citing a source with knowledge of the deal.

Meanwhile, Toutiao has started preparations for an initial public offering (IPO) it plans to launch next year, the report said.

YunFeng Capital, co-founded by Alibaba's Jack Ma, reportedly participated in the round, which is led by SoftBank and venture capital firms Primavera Capital and KKR.

This marks the first time the six-year-old tech startup is linking up with Alibaba, whose rival Tencent is backing Kuaishou, the second most popular short-video mobile app in China after Tiktok.

Earlier rumors had said Alibaba would invest directly in Tiktok, also known as Douyin, once it is spun off from ByteDance, while YunFeng Capital would invest in Toutiao.

Beijing-based Bytedance also counts venture firm Sequoia Capital as well as private equity firms General Atlantic and Hillhouse Capital Group as backers, Reuters reported.

Several media reports said in June that Beijing-based ByteDance had been in early-stage talks with investors to raise US$2.5 billion to US$3 billion, which would see its valuation soar to as high as US$75 billion.

By comparison, Nasdaq-listed tech giant Baidu had a market valuation of US$67.7 billion as of Oct. 24.

Even before the latest funding round, ByteDance had already been valued at US$75 billion, AWTMT said, citing a source. That would rank it among the world’s most valuable private tech firms with Uber Technologies, which may be valued US$120 billion if it moves forward with an IPO early next year.

Toutiao, China’s top news aggregator, said it has 400 million daily active users in China and around 100 million daily active users overseas. It expects to book a revenue of 50 billion yuan (US$72 billion) this year, a two-fold increase from 2017.

Expanding beyond its news business, Toutiao quietly launched in October a social media app called Xincao, which allows users to share photos and videos linked to e-commerce listings.

ByteDance's Tiktok is said to have 500 million active users. Last December, it acquired popular video app for nearly US$1 billion and moved users to a revamped version of Tiktok. The app was the world’s most downloaded app in the first quarter of 2018.

Despite its quick success and lofty valuation, ByteDance is reportedly affected by the government crackdown on internet content. In April, Toutiao was temporarily taken off app stores on the government orders, while a separate joke app was permanently shuttered.

In fact, the political headwind is said to be a major factor that prompted Toutiao to consider going public.

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