China's Tencent invests US$50 million to build Canadian start-up's Kik Messenger into 'WeChat of the West'

PUBLISHED : Wednesday, 19 August, 2015, 8:05pm
UPDATED : Wednesday, 19 August, 2015, 8:07pm

Apparently not satisfied with operating two of China’s biggest mobile messaging apps in the guise of WeChat and QQ, China's biggest internet company Tencent has invested US$50 million in Canadian start-up Kik Interactive, which runs the teen-friendly Kik Messenger app.

The injection of wealth from China’s biggest social network and online entertainment company brings the start-up’s valuation to US$1 billion, Kik said in a statement Monday.

It also gives the app more room to manoeuver vis-a-vis wealthy rivals like Facebook-owned WhatsApp and Snapchat. Kik was founded by a group of students at the University of Waterloo in Ontario, Canada. 

Tencent has been fortifying its position in recent months by sinking its teeth into a variety of exposed areas. 

It is preparing to launch an online stock trading platform, has vowed to invest more in its online-to-offline partnerships, and earlier this month proposed acquiring any remaining shares in mobile and online travel services provider eLong that it does not already own, in a bid to further tap China's tourism boom.

Kik Messenger looks like another sensible bet as the app has over 240 million registered users. It is especially popular among young teens in the US, with two in five now active users of the app, the company claims. 

Part of its appeal is that it does not require a phone number to sign up. It is also quirky, with one function letting users “chat” with automated, branded bots that tell jokes. 

Some 16 million users have engaged with 80 branded accounts from the likes of BuzzFeed and Spotify, Kik said.

But such numbers pale in comparison to the stats flung out by WhatsApp and Facebook Messenger, which boast 800 million and 700 million monthly active users, respectively. 

Kik founder and chief executive Ted Livingston dreams of building the app into a platform integrating games, shopping and payment systems and has even described it as “the WeChat of the West”

Tencent has recently scaled down its aggressive efforts to expand WeChat to foreign markets, opting instead to develop the platform in China and expand its mobile advertising business. 

But the investment in Kik indicates the Chinese company’s continued interest in the North American market.

READ MORE: China's digital monopolies are killing competition and need to be regulated

Together with rival Alibaba, which controls 80 per cent of online shopping revenue in China through its various e-commerce platforms like Taobao, Tencent has proven itself a prolific investor in US tech start-ups

Earlier this year, both firms invested in Snapchat, a video messaging app that boasts almost 100 million monthly active users and is blocked in China. 

Kik has also been on a roll. It raised US$70.5 million in venture funding earlier this year and said it plans to use the funds to double its team of 100 over the next year.