Kik Interactive Inc., a messaging application that explored options earlier this year including a sale, received $50 million in funding from Tencent Holdings Ltd.
Kik is valued at $1 billion with the investment from the Chinese technology giant, the Canadian company said Tuesday in a statement. The startup’s app is popular with young teens and has 240 million registered users. Tencent runs one of the world’s most popular messaging apps, WeChat, and was interested in learning how WeChat-like features would perform with American and Canadian smartphone users, Kik Chief Executive Officer Ted Livingston said.
“We want to be the WeChat of the West and Tencent was like, ‘Yup, we agree, we think they can do it,’” Livingston said. “So that’s very exciting for us.”
WeChat has grown into a 600 million-user messaging giant that lets customers chat, book cars and pay for bills from inside the app. Kik, which already incorporates third-party games and videos, wants to emulate that model in North America, Livingston said in a phone interview.
Earlier this year, Kik hired Qatalyst Partners to set up conversations with potential acquirers or corporate investors, in part because the company is based in Waterloo, Ontario, far from major technology funders in Silicon Valley and Asia. The company concluded its search with Tencent’s investment, Livingston said, noting that the cash infusion isn’t expected to lead to a Tencent acquisition.
Kik’s valuation is dwarfed by some messaging competitors, such as WhatsApp Inc., which was acquired by Facebook Inc. last year for $22 billion, and closely held Snapchat Inc., which took in funding at a $16 billion valuation in May.