Tencent-backed Chinese social networking platform Soulgate files for $100m US IPO

Soulgate, a Tencent-backed social networking platform based in Shanghai, has filed to raise up to $100 million in an initial public offering in the US even as it continues to burn money since 2019, its filing with the Securities and Exchange Commission showed.

The company’s prospectus is highly redacted and the amount specified is a placeholder amount that is likely to change. It plans to list on the Nasdaq under the symbol SSR.

Founded in 2016, Soulgate is an algorithm-driven online social playground in China, where people can create brand new identities online to freely share, explore, and connect with other users.

The app offers value-added services such as premium memberships, virtual gifts, and voice chats.

“Soul is a virtual social playground, where people can live in the moment, express themselves, and draw inspiration from each other’s creativity,” the company said.

In March 2021, the company averaged 9.1 million daily active users, a 94% increase over the prior-year period.

Chinese technology giant Tencent is Soulgate’s largest shareholder, owning 49.9% of the company’s issued and outstanding ordinary shares. Soulgate Holding’s management owns 33.2%.

Despite its growing popularity, the company continues to burn money to acquire new users.

Soulgate reported revenue of 498 million yuan ($76.3 million) in 2020, up 604.3% from a year earlier. In the first three months of this year, the company said its revenues increased by 259.8% to $36.4 million from the same period last year.

However, it recorded a net loss of 488.1 million yuan (US$74.8 million) in 2020, compared to a net loss of 299.5 million yuan in 2019. In the first quarter of 2021, Soulgate recorded net loss of 382.5 million yuan ($58.4 million).

Soulgate, which primarily generates revenues from value-added services such as virtual items and membership subscriptions on the Soul app, seeks to tap into the massive mobile internet user population in China to further grow the business.

According to the iResearch Report, China has a massive mobile internet user population of 986 million as of December 31, 2020, amid the intensified transformation of China’s digital economy and the continuous development of mobile technologies such as 5G telecommunications.

Mobile social networking has become a crucial part of China’s mobile internet users’ daily lives, with a penetration of 90.3% in 2020, according to the iResearch Report. The size China’s mobile social networking market reached 116.2 billion yuan in 2020 and is expected to grow at a CAGR of 18.9% from 2020 to 2024, to reach 232.2 billion yuan in 2024.

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.