ByteDance Is Planning To Raise $2B Of Funding At $180B Valuation

? Funding

• Beijing-based Internet media unicorn and mobile games publisher ByteDance is in talks to raise $2B in funds at a $180B valuation before listing some of its businesses on the Hong Kong stock exchange

  • Sequoia is rumored to be among the possible investors of the round

  • Neither representatives of ByteDance, nor Sequoia commented on the deal

• The company’s last known valuation is $140B

• ByteDance is planning to hire 10,000 more employees in China by the end of the year

  • The company is looking for programmers, technicians, marketing and sales managers— there are more than 100 job vacancies deal with gaming and e-commerce sectors open in Beijing Shanghai, Wuhan, Chengdu, and Hangzhou

  • Currently, ByteDance has over 60,000 employees. In March 2020, ByteDance founder Zhang Yiming set a target of 100k employees in total

?  Product

• ByteDance is best known for TikTok (Chinese: Douyin) — a video-sharing social networking service with more than 800 million monthly active users and a total of 2 billion downloads

• However, the company also actively develops and publishes mobile games, such as Combat of Hero, Xiaomei Fights the Landlord, My Kung Fu, and JJ Street Basket, which are among the most popular mobile games in China

  • In March 2020, ByteDance was granted its first video game license, issued by the Chinese National Radio and Television Administration (CNRTA). This document allows ByteDance to earn revenue from mobile games

  • In September 2020, ByteDance announced its plans to hire 1000 employees for its subsidiary mobile video game studio Zhaoxi Guangnian Information Technology

• Published in 2019, mobile action RPG Combat of Hero is a ByteDance’s gaming debut:

  • The game has almost 3.5 million downloads in total with a peak of more than 1.1 million downloads in March 2020, which can partially be explained by the increased interest in mobile games during the lockdown

  • However, after the second peak of 500k downloads, In August 2020, the game has been showing a decrease in users’ interest, being downloaded just about 37k times, in October 2020

• More than that, TikTok is one of the most competitive advertising platforms for gaming companies with lots of creators posting gaming highlights, clips, and news videos

• In April, TikTok partnered with Collegiate StarLeague to create a new Esports event with a $60k prize — the TikTok Cup

• Currently, the TikTok ban case is pending in the US, after Donald Trump signed an executive order to block the app in all stores

? US-China Conflict

• Back in 2017, ByteDance acquired growing video app Musical.ly for up to $1B and merged it with TikTok to increase TikTok’s popularity in the U.S. and Europe

• With increased political tension between the U.S. and China, the American government started to concern that the Chinese government can potentially use TikTok to gain data on Americans

• As a result, on July 31 2, Trump said that he would act soon to ban TikTok, and soon after that there wererumors that Microsoft was in talks to acquire TikTok operations in the U.S.

• On August 1, ByteDance informed that it was ready to divest the U.S. operations of TikTok

• On August 2, Microsoft confirmed that it was interested in TikTok’s U.S., Canada, Australia, and New Zealand operations

• On August 3, Trump gave Microsoft 45 days to seal a TikTok deal and issued a September 15 sell-by deadline. If TikTok doesn’t divest from ByteDance before that time, it will be banned in the U.S.

• The same day, Trump signed an executive order to block all U.S. transactions with ByteDance (and Tencent) starting September 20

• By the time of September 15, the deal reached its deadline, but still was not made

• On September 17, ByteDance announced its plan of the initial public offer of TikTok Global, a new company, that would allow a Chinese short video app to continue functioning in the US

• On September 23, TikTok avoided being banned, since US judge Carl Nichols temporarily blocked Trump order, allowing TikTok to remain in US app stores

? Previous Funding

• In October 2018, ByteDance secured $3B, at a $75B valuation, with participation from KKR, Primavera Capital Group, General Atlantic, SoftBank, and Tiger Global Management LLC.

? Previous Deals

• In August 2020, ByteDance invested in the Chinese mobile game developer MYBO

• In March 2019, ByteDance acquired Shanghai-based mobile game developer Mokun Technologies, for an undisclosed sum

SOURCES: BLOOMBERG