Qutoutiao, three-year-old news, and video aggregation startup, just received $171 million in a convertible loan from Alibaba. This transaction is said to be converted into about 11.4 million shares of Qutoutiao for $15 per American depositary shares. This significant amount of shares equals to an approximate 4 percent of Qutoutiao. This deal progressed just six months after Qutoutiao happened to raise $84 million in a downsized initial public offering through Nasdaq.
Alibaba’s new favorite: Qutoutiao
Qutoutiao, which means “Fun headlines” in Chinese, runs a news app that feeds users content based on their past habits, and an e-book reading app for those with a longer attention span. The Shanghai-based news app company is among a handful of startups alongside their e-commerce challenger Pinduoduo that are piling into the largely untapped, smaller cities outside China’s major urban centers of Beijing and Shanghai for growth.
Significant funding boost gives Qutoutiao a head-start
Due to the recent economic refresher, Qutoutiao is now one of the great Chinese tech startups with backings from both Alibaba and Tencent. These arch-rivals compete in voluminous realms. Meanwhile, other companies that have enjoyed fundings from both business tycoons include the car-hailing service, Didi Chuxing and the youth-focused media company Bilibili.
Alibaba’s support is also a significant boost for Qutoutiao as it fights an inexorable battle with ByteDance, a growing threat to China’s tech veterans. ByteDance, unlike most of China’s emerging startups, has not taken fundings from any of the business tycoons. The startup plans to stamp their dominance in the Chinese internet on their own.
ByteDance: An ongoing threat for Chinese Tech veterans
ByteDance’s competition with social media leader Tencent has been rather intense than that with Alibaba. The e-commerce giant recently agreed to facilitate e-commerce sales for ByteDance influencers.
ByteDance runs an empire of popular new media products that include short-form video app Douyin and news distribution platform Jinri Toutiao. TikTok, which is the international version of Douyin, is turning heads across the globe, including in the United States, and has reportedly stimulated a Facebook clone.