The deal follows two recent major investments by Toutiao’s parent company ByteDance, which signals the company’s intent to further broaden its presence. In early November, it invested $50 million in Live.me, a popular live streaming platform among young adults in the U.S., before announcing its acquisition of China’s lip-syncing video app Musical.ly a few days later.
At the time of the deal, the acquisition of Musical.ly was said to represent the biggest venture abroad for the Chinese startup valued at $20 billion.
In Faceu, Toutiao will own a startup boasting 250 million registered users. The app functions as an editing platform that utilizes AR technology to allow users to edit their photos and add features like emojis, stickers, beatification and texts, while they take selfies. This enables users to see their selfie with the intended effect in real time, as opposed to editing the picture after the photograph is taken.
The app’s technology can also be applied to video chats and short videos, which could lead to a possible collaboration between Faceu and Toutiao’s very own short video platforms, such as Douyin he Huoshan Xiaoshiping.
Toutiao aggregates news and videos from hundreds of media outlets and has become one of the world’s largest news services in the span of five years. In China, it is one of the few internet operations to have found success without the backing of one of the country’s three biggest industry players: Tencent, Baidu and Alibaba.
Its parent company, ByteDance, is a Beijing-based startup founded in 2012 by Zhang Yiming. The firm is reportedly on track to pull in about $2.5 billion in revenue this year, largely from advertising. It plans to make Toutiao a global content and technology conglomerate after it raised $3 billion in April for its global expansion and posted a valuation of $20 billion.
The acquisition of Faceu is a further indication of the rising popularity of beauty and selfie apps in China and investors’ eagerness to capitalize on the trend. In January, selfie app developer Snow China, the Chinese affiliate of South Korean firm Snow Corp, secured a $50 million investment from Sequoia Capital China and SoftBank Group. Last year, another selfie app Meitu saw its shares climb to a record high after it was added to a second equity-trading link between China’s Shenzhen exchange and Hong Kong.
Faceu, which was founded in 2014, raised an angel round from IDG Capital in 2014, and completed a small Series A round from IDG Capital and Lightspeed China Partners that same year. In 2016, it raised tens of millions of US dollars from Lightspeed and Meitu, before raising $50 million in a Series C round of investment from undisclosed investors.