An inside look at Tantan’s matchmaking success
China’s top dating app Tantan announced on June this 21st that it has raised a $70 million worth in a Series D, summing up its total accumulated fund to $120 million, led by NASDAQ-listed online social entertainment firm as well as China’s pioneer of live streaming, YY Inc and Genesis Capital with participation from SAIF and Zhongwei Capital. Considering Tantan’s valuation of Series B and Series D, the valuation nearly increased 7 times in two years, according to LB Investment, an early backer of Tantan who invested in its Series B and achieved a partial exit in this Series D round.
Tantan works through the location base service mechanism and matches you with the person that has been to the same place you’ve been to. Tantan pushes the match based on user’s common tags: same hobbies and interests as well as visiting the same places. The default of Tantan is that it doesn’t show you the people that you have phone contacts. However, if you have a secret crush on someone around you, Tantan helps you to connect with that person.
For example, say you have a secret crush on your classmate. You can save that person’s phone number on your phone, then Tantan will send out a message to your lover, “Someone around you has a crush on you and wants to invite you to Tantan.” After joining Tantan, the photo of that person will be shown to you, and the same goes for that person. If both of you press “Like” rather than “Skip”, then you will be matched.
On July 2015, Tantan’s DAU was reportedly 250,000, and today, Tantan’s DAU reached over 6 million, an increase of nearly 24 times with the next day retention rate of 75%.
Why Tantan is the next generation of QQ and WeChat
“In the 1.0 era, QQ instant messaging tools enabled users to make friends across the city and even across the country. In the 2.0 era, as we are now overwhelmed with too many online friends, it became important how you will remove the invalid social link,” Tony Park, head of LB Investment in China and previously senior director of Alibaba’s overseas strategy told TechNode in an exclusive interview.
When Tantan was about to raise Series B, Tony has been looking for a mobile social application in the 2.0 era.
“WeChat brought in a concept of ‘friend’ to allow users to build the efficient relationship between the online friends, but I thought, there must be an efficient way to meet strangers to exchange and make friends,” he said.
In the beginning, Tony and LB Investment China team downloaded a variety of social applications to do a top-down evaluation, and they finally found Tantan.
“After I decided to invest in this area, I searched all the products in the market and tested them out for myself. I contacted Tantan and met the founder, and decided to invest in them,” Tony says.
Tantan’s design purpose is to eliminate layers of ineffective strangers and encourage the user to take the initiative to choose the person you want to be friends with, then the other person does the same. The two funnels screening reduces invalid users, and improve the user’s dating success rate greatly.
“After the investment, I also participated in the product management and planning, which allowed the company to grow its user base tremendously,” Tony remarked, who served as an acting president of the Chinese game company The9, with his strength in product operation.
Matching investors to Tantan
In the process of closing Series D investment, many investors wanted to join the round, and Tantan’s financing round was oversubscribed by too much demand. To maintain the proportion of the founding team’s shares, South Korea’s renowned VC fund LB Investment sold some of their existing shares to two investors and achieved a partial exit.
“Selling our existing shares to two new investors, who are also giant internet companies in China, will help us form much stronger shareholders in the company. We still have a considerable amount of shares on Tantan and we confidently believe that Tantan can achieve a successful IPO,” Tony said.
Previously, Tantan raised a $5 million Series A in 2015 from Bertelsmann, then completed a $13 million Series B from LB Investment, DCM, KPCB and GX Capital in the same year. LB Investment continued to increase investment leadership in the app and led a $32 million Series C with DST Global, Vision Plus Capital in May 2016.