Qiming, Sequoia-backed CooTek files for US IPO

Its backers include Qiming Venture Partners, Sequoia Capital China, SIG Asia, CCB International, and HG Capital. CooTek has yet to announce the size and pricing of the offering. The company has earmarked part of the proceeds for R&D with a particular focus on big data analytics and artificial intelligence (AI) technology.

CooTek launched the TouchPal Smart Input app – which supports multilingual next-word prediction and mistyping correction and auto spelling correction – in 2008 and quickly posed a threat to Nuance Communication, then the dominant US player. Nuance first tried to buy CooTek, then took legal action against the company, accusing it of patent infringement. This action failed.

TouchPal accumulated an average 125.4 million daily active users (DAUs) in June 2018. Last year, it was preinstalled on devices shipped by more than 50 manufacturers, including Oppo, Vivo, and HTC. CooTek collects a huge amount of information based on user activity and this is turned into insights through AI and big data analytics.

For example, having identified an interest in fitness-related content, the company launched two fitness apps. There are now 15 other apps in total with an average 7.3 million DAUs in June. An AI-powered virtual personal assistant has also been launched that understands everyday conversations and delivers relevant content. It integrates with TouchPal and other apps.                   

CooTek’s revenue comes primarily from mobile advertising that can be targeted based on these user insights. Revenue reached $37.3 million in 2017, up 238.5% year-on-year, while the company’s net loss narrowed from $30.7 million to $23.7 million.

Speaking to AVCJ last year, Michael Wang, CooTek’s co-founder and CEO, explained that the company initially sought only to license TouchPal to smart phone makers but then switched it to a ‘freemium’ model. Users download the app for free but pay for premium services such as interface designs and customized predictive typing services based on a swipe feature whereby a finger is run across the keypad to form a word without typing out individual letters.

“Companies like Google and Facebook only license technology but they get much more insight into user habits – and once they have these data, they can create new products. The main reason we changed our approach is that we see more long-term value in becoming a user-targeted business,” he said.

Qiming is the largest external shareholder with an 18.2% stake. According to AVCJ Research, it committed $5 million in Series A funding to CooTek in 2010 and then co-led the Series B – worth $10 million – with Qualcomm Ventures the following year. Sequoia then led a $65 million round in 2014. Sequoia and SIG Asia own 17.9% and 14.2%, respectively, although it is unclear when the latter investor first backed CooTek.

Qiming, Sequoia and SIG Asia all re-upped in the most recent funding round – a $100 million Series D in May 2017, which was co-led by CCB and HG.

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• Topics
• Greater China
• IPO
• Technology
• China
• TMT
• Qiming Venture Partners
• Sequoia Capital
• Susquehanna Asia Investment
• CCB