Tencent-backed video site seeks $17bn valuation

Bloomberg

Tencent-backed Chinese startup Kuaishou is seeking to raise funds at about a $17 billion valuation, people familiar with the matter said, as it expands its video-streaming service to Southeast Asia.
The company is targeting around $1 billion of financing, the people said, asking not to be identified discussing a private deal. The startup’s desired valuation would be almost six times the $3 billion it garnered after its last fundraising in March, the people said.
Tech giants from Tencent Holdings Ltd. to Alibaba Group Holding Ltd. are investing billions of dollars in video content because it’s proven highly effective at keeping ad revenue-generating users glued to their platforms. The latest investment in Kuaishou or “fast hand”—a video platform in the same vein as Instagram or Periscope—comes ahead of a potential initial public offering. No final agreements have been reached however and details of the deal could change, the people added. A representative for Kuaishou declined to comment.
The funding underscores the lofty valuations Chinese companies are fetching in a market awash with capital. Five of the world’s 10 biggest venture deals were in Chinese-based companies in 2017, while the US accounted for two, according to researcher Preqin.
The largest was the record $5.5 billion funding for Chinese ride-hailing giant Didi Chuxing. Investors are zeroing in on startups backed by Alibaba or Tencent, in particular.
“After a period of jitters over where the Chinese economy was going, investors seem to have gotten comfortable with the idea the world isn’t coming to an end and have started to see some impressive-looking numbers,” says Mark Natkin, managing director of Beijing-based Marbridge Consulting.
Kuaishou, whose chief executive is Google alumnus Su Hua, uses artificial intelligence to recommend and place videos into the scrolling feeds of users. It garnered an early reputation as a platform for Jackass-style stunts, but clips of people eating sharp objects or playing with fireworks raised the ire of authorities.
Today it’s largely filled with slices of everyday life in working class China, from the migrant worker who dances at construction sites to a villager who livestreams his nighttime fishing trips. It’s also begun to push abroad and is exploring markets such as Indonesia and India. According to App Annie, it’s currently the fifth most popular photo and video iPhone app in Russia. The company, also backed by Baidu Inc., competed with news aggregation giant Beijing Bytedance Technology Co., to buy Musical.ly.
At home, Kuaishou’s achieved viral popularity outside top-tier cities like Shanghai or Beijing. Its more than 100 million daily active users watch short clips and broadcasts of everything from noodle-slurping to physical feats of prowess, with more than 10 million videos uploaded a day. Its existing backers include Sequoia, Morningside Group, China Media Capital and Lighthouse, Natkin said.