An investor that Himalaya Media, a San Francisco-based podcast platform backed by Chinese audio service platform Ximalaya FM, said contributed to its $100 million venture capital funding has denied participation in the deal, according to an Axios report on Wednesday.
Why it matters: The deal, which was announced in February, was considered to be Shanghai-based Ximalaya FM’s first international push, though the two firms say that they are operated separately.
- Ximalaya FM was valued at RMB 24 billion (around $3.4 billion) after receiving an RMB 4 billion funding from Tencent and General Atlantic in August 2018.
- In February, Himalaya announced that it had raised $100 million from General Atlantic, SIG, and Ximalaya FM.
Details: General Atlantic said it never invested in the US podcasting startup, according to a company spokesperson cited by Axios.
- Himalaya CEO Yu Wang said that General Atlantic didn’t directly invest in the company and the $100 million was a three-year commitment mostly from Ximalaya FM, of which Himalaya has received only around $10 million to date, said the report.
- Himalaya has removed a press release about the funding because, Wang said, part of the release was “a little bit confusing.”
Context: Overstating investments is an “open secret” among Chinese startups, Xu Xiaoping, the founder of ZhenFund, a venture capital firm in China, told Chinese tech news outlet Tencent Tech in 2015.
- It was common for startups to exaggerate their amounts of funding by up to ten times, or to just substitute the currencies of the investments from RMB with US dollars, said an anonymous venture capitalist cited by Tencent Tech.