Tencent Pours $2 Billion Into Kuaishou
Chinese short-video platform Kuaishou has raised its latest found of financing, to the tune of nearly $3 billion. Tencent led the round, investing around $2 billion, according to LatePost. Additional investors include Boyu Capital, Yunfeng Fund, Temasek, and Sequoia Capital.
The report also said that the deal was still in negotiating and should be closed at some point this month. This latest round of financing will bring Kuaishou’s valuation to $28.6 billion as the company prepares for an IPO. Tencent will own nearly a 20% stake in the company.
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In addition to financial investment, the two companies are said to be considering strategic partnerships, leveraging their competencies in social and entertainment, instead of the previously discussed join venture into gaming and pan entertainment. News of this latest investment surfaces just after Kuaishou was awarded exclusive partnership with the 2020 CCTV Spring Gala program, bolstering the platform’s prestige and notoriety in the Chinese internet sector.
Kuaishou’s future strategy includes expanding into the e-commerce space. Platforms like XiaoHongShu have pioneered the combination of live-streaming and e-commerce. In addition, Alibaba’s Taobao has a live-streaming feature to attract more customers. Kuaishou aims to leverage their significant user base, which they aim to grow to 300 million DAUs, to generate GMV through influencer-led e-commerce.
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Meanwhile, Tencent is keen on maintaining their influence in the short-video space through substantial investment in Kuaishou, as WeChat’s short-video DAUs are languishing below 10 million.
The two companies had previously explored establishing a joint venture focusing on gaming content, as Kuaishou has more users than popular game live-streaming platforms Douyu and HUYA. Kuaishou needed Tencent’s gaming IPs to compete in this area, which prompted negotiations that ultimately were not successful.
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