China’s Quora-like website Zhihu closed a USD 434 million F round on Monday, August 12. The was led by short video platform Kuaishou and search giant Baidu.
Why is this important: these two happened to be the two major rivals of Bytedance, China’s tech startup hotshot these days.
Speculation floating around Chinese media suggested that Bytedance wanted in as well for strategic planning, but eventually pulled out because its founder Zhang Yiming was unwilling to match the negotiated price to lead on this round
“The tie with Baidu and Kuaishou is helping Zhihu to review its plan to go public, the board members of Zhihu are facing heavy pressures from the investors as they are hoping to take Zhihu to go public as soon as possible. Zhihu has failed its IPO plan previously due to profitability and other undisclosed reasons,” an analyst familiar with the matter told PingWest, who declined to be named because he was not authorized to speak to the media.
The round is the company’s largest to date, which was followed by the USD270 million E round Zhihu had raised last year.
Founded by ex-reporter and software developer Zhou Yan in December 2010, Zhihu has grown rapidly over the past eight years to become one of China’s most popular Q&A and social media hybrid, well known for its once-high quality content on everything ranging from global economy t o personal affairs. As of June 30 this year, the site has more than 220 million registered users and collected more than 130 million questions and answers in its archive, public data showed.
“All three platform (Zhihu, Baidu, Kuaishou) is facing the same problem of an “isolated island of information” and the rising cost of accessing high-quality content, the alliance with Kuaishou and Baidu will help valuable information to reach more people, as well as amplify Zhihu users’ knowledge, experience, and insights.” Zhou said in an internal letter after the new funding round was announced.
The investment will likely also help Baidu, China’s dominant search company, in its ongoing war with Bytedance, which just launched its own general search engine in China last weekend.
Bytedance also has its Zhihu-like Q&A platform, Wukong.
After the investment, Baidu has said that it will link more than 100 million Zhihu posts to its own mobile app and others products. However, a growing concern among Zhihu’s core users is that negative content towards the search giant will be censored since.
Kuaishou, another rapidly growing company that makes short video app, compete with Bytedance’s TikTok and its Chinese sister app Douyin heavily.
The cooperation between the three companies enabled through this investment is largely seen as a win-win situation as it will help them to consolidate resources, diversify revenue and better reach each other’s user base.
One promising way of realizing that could be found in one of Zhihu’s paid services, Zhihu Live, which features paid classes taught by verified experts.
“Kuaishou’s large user base in China’s second and third-tier cities, combined with Baidu’s leading position in the search engine sector, will likely help Zhihu in advertising its new paid features and draw more savvy smartphone users to its platform in the near future.” Li Ke, an analyst with ChinaIPO told PingWest.