Tencent, creators of the Chinese chat app Weixin (WeChat), has invested a $50 million Series D round of funding into Waterloo’s Kik Interactive, a strategic move allowing Tencent access to Kik’s 240 million North American users.
Kik Interactive claims that the investment now values their company at $1 billion.
Like many in the unicorn club, Kik has yet to turn a profit, betting on their potential for becoming the next globally ubiquitous social network.
Fully 70% of Kik’s user base are in the 13-24 year-old demographic. Kik claims that 40% of U.S. teens use their product.
“Young Americans are a large group with unmet needs. We can’t think of a better group to be building for,” said Kik founder and CEO Ted Livingston.
WeChat is used by half a billion people in China, and has quickly innovated its way out of merely being a chat app.
WeChat allows users to play games, order taxis or take-out food, not to mention making investments and applying for mortgages without ever leaving the app to interact with what normally would be third-party applications to complete those transactions.
In a Medium article last November, Kik CEO Ted Livingston wrote that for WeChat users “there is no such thing as offline,” and proclaimed his ambition to develop Kik into “the WeChat of the West.”
While SnapChat and Facebook’s Messenger service may boast larger numbers, Kik is betting that the blurring between “chat” and “life” encourages a deeper engagement for users, which ultimately is far more valuable to third-party connections and marketers than a mere chat service.
“We think chat will be the simplest way to connect with the world around you,” says Livingston. “Consumers and developers alike are suffering from app overload, and we are increasingly seeing the potential for services to be delivered in better, lighter-weight ways through chat, especially with bots. Companies like Slack, Telegram, and Facebook are also starting to realize this.”
More than 16 million Kik users exchanged messages with bots last year.
Founded in 2009, Kik was born out of a moment that is now seen as one of the more profound stepping stones in BlackBerry’s downfall.
In 2007, Ted Livingston tried to convince BlackBerry to take BlackBerry Messenger cross-platform, something they adamantly refused to do and almost didn’t survive to regret.
So Livingston took his idea solo, while then Waterloo giant BlackBerry collapsed and transformed itself into what it is today.
Kik Interactive plans to use the money to double its workforce, hiring on approximately 100 more people, mainly to work in Waterloo.
With offices already in Waterloo, New York and San Francisco, Kik recently opened a Los Angeles office to find partners in the entertainment industry for its Promoted Chats.
Promoted Chats, which launched last August, is now used by over 60 brands, including Funny or Die, Seventeen Magazine, Skullcandy and Vans.
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