Chinese Game Site Said to Seek Funds at $1.2 Billion Valuation

  • China’s Twitch said to seek about $145 million in financing
  • Douyu’s new fundraising will help it fend off competitors

Douyu, the live-streaming service backed by Tencent Holdings Ltd. that’s been compared to Amazon’s Twitch, is in talks to raise a billion yuan ($145 million) in funds at a valuation of about $1.2 billion, according to a person familiar with the matter.

The three-year-old company, whose name means “fighting fish,” needs capital to expand beyond games-streaming and fend off rivals, the person said, asking not to be named discussing a private deal. The potential valuation is only 20 percent higher than in its previous round, but the fundraising plans are initial and could change depending on negotiations, the person said.

Douyu built a business by allowing gamers to live-stream their online death-matches and hosting discussions about strategies. It now allows people to broadcast anything from sports to singing and cooking, competing with more than 200 other Chinese start-ups including Panda TV, which is backed by Wang Sicong, the son of China’s second-richest man.

Formally known as Wuhan Douyu Network Technology Co., the company also counts Sequoia Capital as a backer. Xu Juanjuan, a spokeswoman for the company, didn’t respond to phone calls and multiple text messages requesting comment.

Live-broadcasting has taken off around the world on platforms as varied as Facebook and Twitter, but it’s become a particularly lucrative and popular exercise in China. It’s mushroomed into $2.5 billion industry in that country alone, as enthralled viewers wire money to their favorite social-celebrities cooking lunch or seductively eating bananas.

The live-streaming boom is a relatively new phenomenon fueled by bigger data plans and the shift from computers to mobile. But in China, it emerged as a low-cost pastime for millennials who lack the budget for pricier entertainment. Operators earn revenue by taking a cut when viewers bequeath virtual roses and digital diamonds.

It’s unclear how many users Douyu has or how large the service has grown since its 2014 inception. If it achieves its targeted valuation, that would make it about half the size of Nasdaq-listed YY Inc., among the largest of the publicly traded Chinese live-streaming outfits with 53.4 million mobile monthly active users as of the end of the third quarter.

— With assistance by Lulu Yilun Chen, and David Ramli

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