California-based messaging application maker, Tango, announced Thursday that it has raised $280 million in a fresh round of funding, of which $215 million has come from China’s Alibaba Group, news reports said, while the remainder comes from existing investors including Access Industries, venture capital firm Draper Fisher Jurvetson and Yahoo co-founder Jerry Yang.
Hangzhou-based Alibaba, which is planning to go public on a U.S. stock exchange soon, now has a minority stake in Tango, which reportedly has 200 million registered users and 70 million active users, and is growing rapidly in North America, the Middle East, Taiwan and Singapore. With the completion of the latest round of investments, Tango has acquired a total of $367 million in funding and the messaging app maker plans to use its latest chunk of cash to hire more people in the U.S. and China, as it works to expand its presence in these markets.
“It’s an incredibly competitive market, and a new era for these kinds of transactions and financing levels,” Eric Setton, Tango’s co-founder, said according to Bloomberg, adding that the company had received many offers to be acquired, but that it has chosen to remain independent. “Alibaba was very understanding that we wanted to keep leading the company.”
Whatsapp, another phone-messaging application, was recently acquired by Facebook in a massive $19 billion deal.
Alibaba, which is currently preparing to be listed sometime this year or early next year, has a current valuation of about $120 billion and is one of the most anticipated initial public offers, or IPOs, as it plans to raise about $200 billion, which will make it the second-largest Internet company after Google (NASDAQ:GOOG), according to Bloomberg.
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Alibaba’s main rival in China, Tencent Holding Ltd. (HKG:0700), which owns messaging apps like WeChat, dominates the market in that country with close to 300 million users and a market capitalization of about $140 billion, according to Financial Times.
In January, Alibaba invested $15 million in 1stdibs, an online retailer selling luxury products, following a $206 million round of investment in ShopRunner, a delivery logistics company, as Alibaba looks to expand its distribution network.
“Tango has exhibited tremendous growth because of its unique approach to combine free communications, social and content,” Joe Tsai, Alibaba’s executive vice chairman, said according to Bloomberg. “They have a disruptive way of looking at the mobile and messaging opportunity.”