Chinese mobile content platform operator Qutoutiao announced on Thursday that its e-book brand Midu has secured $100 million in a Series B round of financing led by CMC Capital, an investment firm focused on the media and entertainment sector in China.
Qutoutiao, which also poured money into the new round, closed the fresh funding for two flagship online literature platforms collectively known as Midu, including “Midu Novels” and “Midu Novels Lite,” per a statement on its website. Qutoutiao remains the majority shareholder after the transaction.
Midu Novels was launched in May 2018 to offer free online literature supported by advertising. The platform was among the three popular e-book mobile apps that were blocked by the Chinese authorities from distributing new books earlier this year due to concerns over “harmful content.”
Midu Novels and Tomato Novel, launched by TikTok operator Bytedance, were required to halt updates for the three months through October 15, while Jinjiang Literature City, which claimed to have over 34.08 million users as of June 2019, suffered from a roughly two-week suspension through July 29.
Midu Novels has undertaken various product upgrades since July 16 and has resumed regular content updates and commercial activities on October 16, said Qutoutiao in the statement.
Proceeds will be used to finance the construction of an author network, expansion of literature content and brand promotion, which will help Midu compete in China’s burgeoning online literature market.
The market size has reached 15.3 billion yuan ($2.15 billion) in 2018 with a year-on-year growth of 20.3% and is expected to exceed 20 billion yuan ($2.81 billion) by 2020, according to iResearch Consulting Group.
The Series B round came after Midu closed $18 million in a Series A funding round earlier this year, according to Chinese business data platform Tianyancha. Financial terms of the previous round were not disclosed.
“Midu continues to play a crucial part in Qutoutiao’s overall content platform strategy. We have a clear roadmap ahead for Midu, and our objectives of reaching more than ten million daily active users (DAUs) by the end of the year and becoming the largest online literature platform in China by 2020 remain unchanged,” said Eric Siliang Tan, chairman and CEO of Qutoutiao, in the aforementioned statement.
Midu is among a range of mobile content platforms developed and operated by Qutoutiao. The company’s eponymous flagship mobile application Qutoutiao, which means “fun headlines” in Chinese, applies artificial intelligence (AI)-enabled algorithms to deliver customized feeds of articles and short videos to users based on their unique profiles, interests, and behaviours. Many users on the Qutoutiao platform are from lower-tier cities in China, according to the statement.
Qutoutiao, backed by Chinese technology giant Tencent, raised $84 million in an initial public offering (IPO) on the Nasdaq in September 2018. The company offered 12,000,000 American depository shares (ADSs) at $7 apiece.