Baidu Inc. (BIDU) is investing about $10 million in IndoorAtlas Ltd. to expand mapping services inside buildings and shopping centers as it steps up competition to e-commerce giant Alibaba Group Holding Ltd., according to a person familiar with the matter.
The investment by China’s largest Web-search service values IndoorAtlas, which was founded in 2012 as a spinoff from the University of Oulu, Finland, at about $40 million to $50 million, said the person, who asked not to be identified because the investment isn’t public.
Billionaire founder Robin Li’s investment decision comes days after his company joined hands with Dalian Wanda Group and Tencent Holdings Ltd. (700) to form an online shopping venture. Li is integrating functions such as search and maps to win more advertising sales by connecting mobile-phone users with locations off line, from coffee shops to movie theaters.
IndoorAtlas Chairwoman Inka Mero and Kaiser Kuo, a spokesman for Baidu, declined to comment.
Baidu shares rose 4.3 percent to $223.65 at 11:51 a.m. in New York, taking the stock’s gains this year to 25 percent.
IndoorAtlas is the world’s first to use magnetic anomalies inside buildings to pinpoint indoor locations, with results that are accurate to less than three meters, or about 10 feet, according to its website.
Baidu is investing in mobile applications to capture rising Web traffic on smartphones and tablet computers. The venture with Wanda plans to target that “online-to-offline” segment of directing mobile Web users to nearby shops and restaurants, Wanda Chairman Wang Jianlin said last month.
That’s also an area where Alibaba, China’s biggest e-commerce operator, is seeking to expand its presence. In March, Alibaba agreed to buy a stake in Intime Retail Group Co., owner of department stores and supermarkets, as the company integrates online and offline shopping.
Alibaba in July acquired AutoNavi Holdings Ltd. in a deal that valued the company at $1.5 billion to bolster its Internet mapping tools ahead of an initial public offering.
While Baidu already offers navigation software, it’s of little use inside buildings or shopping centers to locate a specific store or restaurant that users may have found in an online advertisement on their smartphone.
IndoorAtlas raised $4.5 million in a round of funding led by Mobility Ventures and the Finnish seed fund KoppiCatch, the Wall Street Journal reported in June. The valuation for IndoorAtlas wasn’t disclosed at that time, according to the report.