Momo, China’s largest dating app and social networking company, is acquiring its rival, the Tinder-like app Tantan, for USD 735 million in cash and a stock swap. The deal is expected to close in the second quarter of 2018, according to Bloomberg. Tantan’s team will continue to operate its brand independently, Momo CEO Tang Yan said in a statement.
Initially a popular dating app, Momo is now a location-based mobile social networking platform. Launched in 2011, Momo managed to get listed three years later on Nasdaq in December 2014. Momo previously raised funding from a group of known investors, including Alibaba, Matrix Partners China, Sequoia Capital, among others. By the end of 2017, it had attracted about 100 million users.
As a market leader, Momo faces both challenges and opportunities. The company has started focusing on social networking between strangers, a field that Tencent has its since operated within. Additionally, live streaming has and likely will continue to contribute substantially to Momo’s advantaged position. Currently, Momo offers various video features and services beyond live streaming, including shooting short videos for social media sharing as well as video chat functionality that allow users to interact in an immersive way.
Tantan is a Tinder-like social and dating app targeted at China’s young generation. Founded in 2015, it is designed to help users find romantic connections as well as to meet interesting people. Tantan claims to have achieved 5 billion matches to date and has become one of the top apps for Chinese young singles looking to build relationships. According to Tantan, its mobile platform has attracted over 90 million registered users, with six million daily active users.
So far, Tantan has completed four rounds of financing, including USD 5 million from BAI for Series A, USD 13 million from DCM, KPCB, and others in a Series-B financing round, USD 32 million for Series-C financing from DST, Vision+ Capital, as well as USD 70 million for Series D led by YY.com.
Based on the company’s financial statements, live streaming contributed to over 90% of Momo’s revenu in the third quarter of 2017, yet its growth rate is reducing at the same time. Thus, looking for new opportunities is a top priority for Momo. And searching for opportunities within social networking technologies has become a primary focus.
Interestingly, Tantan has recently launched a membership subscription function similar to that of Tinder. Doing so helped the latter gain higher stock prices. But there is little luck for Tantan so far due to China’s domestic policies and its competitive market environment where it is difficult to achieve good cash flow with a subscription model.
Momo and Tantan have their own strengths in their respective markets among targeted customers. Momo has more male users, and excels in a commercial capacity. Tantan, on the other hand, has attracted more female users. After the acquisition, Tantan’s team will continue operating the mobile app under the Tantan brand aided by Momo’s support and oversight. The acquisition aims to cover a greater range of user demographics and needs, ultimately building up a larger social networking market in a strategic way.
(Top photo from Tantan.)