Bytedance in focus | The investment portfolio

1. Investments and acquisitions

According to business intelligence platforms Tianyancha and Qichacha, investment and acquisition activity at Bytedance from 2015 to 2019 has largely been aligned.

Interestingly, the number of funding transactions appears to have slowed down in 2019. Based on Bytedance’s record, the majority of investments (15 of 22 transactions so far) have taken place in the first half of the year.

2. Stages of investment

Series A funding, including pre-Series A, Series A, and Series A+, makes up more than 40% of total investments. Bytedance doesn’t seem as interested in ponying up post-Series C, although the dollar amounts for later-stage funding (see figure 5) tend to be higher.

3. Disclosed amount of investment per year

A full 10 of Bytedance’s 22 investment figures are undisclosed or described simply as being in the “tens of millions [of RMB].”

That said, combined with graph #1, they could potentially show fewer but bigger bets on businesses. While the number of investments declined in 2019, the cumulative value of the transactions appears to have shot up.

4. Types of investments*

Based on disclosed figures, we start to see interesting but incomplete patterns regarding Bytedance’s sectors of interest.

One investment in Lixiang Qiche (literally, “ideal car”) makes up the entirety of the auto sector shown in figure 4. By contrast, while Bytedance has invested five times in content/news startups (twice in the same company, the Indian local-language news platform and Helo competitor DailyHunt), the total known dollar figures fall far short of entertainment or education.

Due to incomplete information, we also don’t know how much Bytedance sank into its two investments in AI companies.

* We counted each company once. For startups that straddle sectors, we chose the “dominant” category.

5. The data

And finally, for reference, here are all the companies listed as having received investment from Bytedance within the last four years.

Types of investment: number of companies

The upbeat

Highlights from recent headlines

Developments in India

• The Indian Express: Bytedance’s content platform Helo, which features 14 Indian languages, hit 50 million monthly active users in June 2019 and is projected to reach 100 million monthly active users (MAU) by the end of the year.

While viral short-video app TikTok is big in India with nearly 300 million users, of whom 120 million are active every month, its English interface may deter a large number of Indian users who aren’t fluent in the language. Helo was Bytedance’s solution to this problem, and it has not disappointed. If the app is able to reach its MAU goal, it will have achieved a growth rate of 300%. However, compared with TikTok, which has already began monetizing in India, Helo still does not have a monetization scheme in place.

• Medianama: “Bytedance, the Chinese tech company that owns TikTok, is trying to persuade central and state government officials [in India] to join the platform and use it to promote various government initiatives.”

Bytedance has become increasingly wary of business-disrupting situations since the ban on TikTok in April. The company promised to invest $1 billion in India over the next three years, and to increase the number of local employees to 1,000 by the end of the year. If the lobbying proves to be successful, Bytedance could further reduce the risk of being banned or removed from one of its largest markets.

• NDTV: A 12-year-old Indian boy accidentally hanged himself while attempting to make a video for a TikTok challenge. TikTok said that it does not promote any hashtag challenges or activities that might cause harm to users.

This is not the first death to have happened during the making of a TikTok video in India. Also in June, a 22-year-old dancer broke his neck while doing a backflip for a TikTok video; he died eight days later. While TikTok is not directly responsible for either case, the accidents could potentially sour public sentiment.

Legal disputes

• TechNode: “Lawyers for internet giant Bytedance stated Thursday in a Beijing court that user contact lists taken from phones should not be considered private information.”

In response to the flurry of media reports that followed the trial, Bytedance issued a statement later that day, saying that legal arguments must be interpreted within the context of the trial and that it always asks for user authorization before using personal data. Since the user who brought the lawsuit asked for just RMB 1 in compensation, the case has more of a reputational than monetary impact on Bytedance.

• TechNode: “Beijing Haidian People’s Court issued an injunction against the two owners of short-video app Shuabao on June 28, prohibiting them from downloading short videos and related comments from Bytedance’s Douyin and uploading them to their own platform.”

While it is unknown how much Bytedance will ask for in damages, the fact that the company demanded RMB 90 million from Baidu for a similar case in April suggests that the sum could be sizeable. As Douyin grows in popularity, content appropriation like this may happen more frequently.

Hiring for monetization

• NetEase Tech (Chinese): Douyin is poaching a large number of senior monetization and operation personnel from Baidu as it speeds up its monetization to maintain an edge in the competition with Kuaishou, sometimes offering twice the salary that Baidu gives.

As the audience and KOLs of Douyin and Kuaishou increasingly overlaps, the two platforms will probably engage in an even-fiercer rivalry in the near future. Just last month, Kuaishou announced its goal to reach 300 million daily active users before Spring Festival 2020. Bytedance’s new hires could help it speed up the expansion of its e-commerce business and widen its lead in the competition with Kuaishou.