China's Bytedance to acquire VC-backed Musical.ly
Beijing Bytedance Technology, the parent company of Chinese news aggregator Toutiao, has agreed to acquire Musical.ly, a VC-backed short video social networking platform.
Financial terms were not disclosed but several media outlets reported that Bytedance is paying between $800 million and $1 billion. Musical.ly said it will continue to operate as an independent business within Bytedance, led by the company’s co-founders Louis Yang and Alex Zhu.
The announcement came shortly after Bytedance’s $86.6 million purchase of News Republic, a news aggregation service owned by Cheetah Mobile, as well as a $50 million investment in the US-listed Chinese company’s live-streaming subsidiary Live.me. Cheetah Mobile was an early investor in Musical.ly, holding a 17.4% stake.
Founded in Shanghai three years ago, Musical.ly has built up a strong following in the US and Europe. The app has more than 200 million users globally who use it to create and share personal music videos. Last year, it rolled out a new app called Live.ly for live streaming.
According to AVCJ Research, Musical.ly raised an undisclosed sum from Innovation Camp and CRCM Venture Capital in 2014, and a $16.6 million round from GGV Capital and Greylock Partners the following year. In 2016, it raised a $100 million round - at a valuation of $500 million - led by GGV and Qiming Venture Partners. Greylock and DCM also participated.
Bytedance was established in 2012 and its flagship product Toutiao claims to be the largest content platform in China, with 120 million monthly users. Toutiao uses artificial technology (AI) create personalized news feeds with content sourced from blogs and traditional news outlets.
Backed by the likes of Sequoia Capital, Source Code Capital, and CCB International, the company is said to be in the process of raising as much as $2 billion in a new funding round at a valuation of $20 billion. General Atlantic is understood to be among the new investors.
Since inception, Bytedance has expanded beyond news aggregation into segments such as original content, news search, and music video. In addition to incubating new businesses internally, the company has made dozens of minority and control investments in start-ups.
Its portfolio includes the US-based photo and video-sharing app Flipagram, Indonesia’s Babe and India’s Dailyhunt, both of which are news aggregation platforms. It has also launched English-language news app TopBuzz in North America and music video platform Tik Tok across Asia.
Muscial.ly hopes to leverage Bytedance’s AI technology and customer base in Asia. “By integrating Musical.ly's global reach with ByteDance's massive user base in China and key Asian markets, we are creating a significant global platform for our content creators and brands to engage with new markets,” Zhang Yiming, ByteDance's CEO, said in a statement.
The merger is expected to close by the end of this month.
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