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Will SoftBank’s latest investment make China’s ByteDance the world’s most valuable tech start-up?

PUBLISHED : Friday, 28 September, 2018, 3:03pm
UPDATED : Friday, 28 September, 2018, 3:03pm

SoftBank Group Corp, KKR & Co and General Atlantic plan to make a giant investment in fast-rising Chinese internet player Beijing ByteDance Technology, according to people familiar with the matter, a deal that could make it the world’s biggest start-up.

The latest round may value ByteDance, parent of news aggregator Jinri Toutiao and video sensation Tik Tok, at around US$75 billion before investment, said the people, who requested not to be named because the matter is private.

Tokyo-based SoftBank is initially targeting an investment of about US$1.5 billion, although it is unclear how big its final check will be, the people said. While KKR and General Atlantic have led discussions, the people said SoftBank could play a much bigger role if its investment approaches the outsize amounts it is known for.

Six-year-old ByteDance, which was said to be seeking around US$3 billion in the current round, started out by using artificial intelligence to personalise content for users, but has successfully branched out into short-video via a service called Douyin, known as Tik Tok overseas. That service had 500 million monthly active users as of July.

ByteDance to enter China’s long-form streaming video market, challenging iQiyi, Tencent Video

It also owns the app, which has about 100 million users and is being merged with Tik Tok, the company said in August.

The current deal is still in discussions and terms could change, the people said.

Representatives for ByteDance and SoftBank declined to comment. General Atlantic had no immediate comment, while KKR did not respond to an emailed query.

Digital news site The Information first reported that the Chinese company was in talks with SoftBank and KKR about a deal.

ByteDance said to seek up to US$3 billion in new funding round, mostly targeting US investors

ByteDance is among the largest of a new generation of Chinese internet giants challenging the long-standing dominance of Tencent Holdings and Alibaba Group Holding.

Unlike peers such as Didi Chuxing or Meituan Dianping, ByteDance has grown without the backing of either Tencent or Alibaba into one of the country’s most popular online services provider.

At US$75 billion, ByteDance would just eclipse Uber Technologies, valued at US$72 billion, according to CB Insights data. It would also surpass ride-hailing rival Didi Chuxing’s US$56 billion.

Closely held Ant Financial Services, an affiliate of Alibaba, is said to be valued at US$150 billion, but CB Insights does not count the firm as privately backed. New York-listed Alibaba is the parent company of the South China Morning Post.

TikTok to absorb app into one new video platform as it targets bigger global audience

The funding round comes despite Chinese content providers facing one of the harshest internet crackdowns in the country’s history and a funding squeeze that has pinched smaller start-ups. ByteDance, like many of its competitors, has seen several apps either temporarily pulled from Chinese app stores or shut entirely on the orders of regulators over allegedly inappropriate content.

SoftBank’s arrival could mark a new chapter for the Chinese firm. Founder Masayoshi Son is known for taking an active hand in developing companies in his portfolio, which include Uber and WeWork, through SoftBank’s US$100 billion Vision Fund.