Baidu set to become largest shareholder in VC-backed Qunar

According to a joint statement, the deal is slated to close by the third quarter of this year. Qunar will continue to operate as an independent company, managed by both Qunar and Baidu executives in certain areas of the business. Qunar was launched in 2005 by Zhuang Chenchao, Douglas Koo and CEO Fritz Demopoulos, who will relinquish his position at the company in favor of Zhuang. Demopoulos plans to pursue outside entrepreneurial opportunities, but he will remain a strategic advisor for Qunar.

Since its inception, Qunar has received more than $25 million in backing from GSR Ventures, Mayfield Fund, Tenaya Capital and GGV Capital.

Baidu's investment comes at a critical time as other Chinese heavyweights have also announced plans to enter the online travel business. Last year, Taobao.com, the business-to-consumer website of the Alibaba Group, began vending air tickets on its main site, and last month, Tencent invested $84.4 million in eLong, which is also backed by US-based Expedia.

Currently, NASDAQ-listed Ctrip is considered the leader in China's online travel space. According to iResearch, by October of last year Ctrip had a 53.6% market share, with eLong a distant second on 9%.

Qunar functions differently from the rest, searching for the best flight, hotel and package trip deals from sites including Ctrip and eLong and then aggregating the most competitive prices. In this respect, it is much like US-based Kayak.com. Qunar's services cover more than 11,000 air routes and 102,000 hotels worldwide.

According to a January report released by CNNIC, search was the most popular digital application among China's 457 million internet users. Only 7.9% of users used online travel booking services, compared to 66% of users in the US.

In March of last year, Baidu also linked with Providence Equity Partners to invest $50 million into a Hulu-like online video service, broadening its mandate to include another fast-growing digital segment. Baidu itself committed approximately $10 million to the venture.

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• Topics
• Greater China
• Technology
• Media
• GSR Ventures
• Mayfield
• GGV Capital