The Asian giant keeps expanding its tentacles into new markets
Social media music startup Smule has raised 54 million dollars in a funding round led by Chinese technology giant Tencent Holdings Ltd., which recently acquired 5% of Tesla. With this new capital influx, the startup aims to boost international growth.
The agreement will help Smule, headquartered in San Francisco, to expand into Asia, and thanks to Tencent’s thrust, pave the way for an Initial Public Offering which could arrive as soon as 2018.
“We have seen significant growth in Southeast Asia during the last few years,” Smule’s CEO Jeffrey Smith said. “[The region] is very important for the future of the Internet, and we want to leverage part of the work that the Asian giant has made in China.” Recently, Tencent announced a turnover in excess of $20 billion in 2016.
The Asian technology company, owned by WeChat and Riot, joined current investors Adams Street Partners and Bessemer Ventures in the funding round, which raised Smule’s value up to $604 million.
Tencent, best known for its WeChat mobile app, has pointed out that the growth of its digital music business is a key strategic initiative. Last year, it took over the majority ownership of a new company that merged its digital music business with China Music Corporation, the leading online streaming music business in China.
“We are certain that our investment in Smule will strengthen even more our position to capture the digital music market’s promising potential,” said Poshu Yeung, Tencent’s Vice-President of Global Business, in a media address.
Tencent’s network in Southeast Asia will be key, since Smule aims to increase its market share in the growing base of mobile users in the region, which is already home to 40 percent of Smule’s users. The startup will use funds from the round for marketing and to build its international infrastructure, including data centers.
Some of Smule’s largest competitors are based in Asia, such as China’s ChangBa.