Time’s ripe for Pear with Tencent-led funding

By Xie Jun Source:Global Times Published: 2018/4/16 19:43:39

Private capital chasing short video innovators, but they’re increasingly hard to find

A reporter from Pear Video does a live broadcast at an exhibition center in Shenzhen, South China's Guangdong Province in September 2017. Photo: IC

The domestic short video industry will see the emergence of dozens of unicorns, supported by an inflow of private capital and guided by government regulations, experts told the Global Times on Monday.

Domestic short video company Pear Video has just secured an A-round financing of 617 million yuan ($98.23 million), the company confirmed with the Global Times on Monday.

The investment was led by Tencent Holdings, with the participation of Baidu Inc. Pear Video declined to provide further details.

Tencent invested in leading domestic video company Kuaishou in March. Tencent didn't reply to interview questions as of press time.

In November 2017, Pear Video secured $167 million in pre-A round financing by an investment fund under domestic news website the people.com.cn, according to media reports.

According to a report by caijing.com.cn on April 2, there were 91 financing events in the short video sector in 2017, down from 102 in 2016 but up from 64 in 2015.

Major players in the sector have become capital magnets. For example, Kuaishou, a popular video-sharing app, had raised $1.4 billion in six rounds of financing so far. Yixia (Beijing) Technology Co, the parent company of online video company Miaopai, secured nearly $800 billion in the past five years, the caijing.com.cn report noted.

Ma Shicong, an analyst at Beijing-based research company Analysys International, said that domestic capital will keep seeking winners in the short video sector. But investment will shift from the current opportunistic model to one grounded in rational analysis, Ma said.

A deputy investment director from a Shenzhen-based private equity investment firm told the Global Times on condition of anonymity that short video companies were hot targets for domestic investors in 2016 and 2017, but it's become tough to find new players that stand out from the handful of established leaders.

"The few big players already have plenty of capital. For the smaller ones, investors are not much interested in them," she said.

Ma said that opportunities still exist for smaller companies, if they can prove their "innovative traits."

Liu Dingding, an independent technology analyst, told the Global Times on Monday that the short video sector is still in its infancy.

"In the future, dozens of new unicorns will emerge" and reshape a sector that's now dominated by just a few companies, he said.

The government recently cracked down on irregularities in the short video sector, such as ordering a permanent shutdown of neihanduanzi, a social network app (containing video, pictures and other content) under Jinri Toutiao, one of China's most popular news aggregators.

According to Ma, government management will help short video companies achieve a balance between market profits and social responsibility. "It's a positive force in the industry," she noted.

Liu said that government administration will help drive out short video companies with unqualified content and make the good ones stronger.

"On the whole, it won't have a negative impact on the industry or cause investors to retreat from their investment in the sector. Tencent's recent moves are proof," he said.

Another Internet giant Alibaba Group Holding invested in short video provider Youku Tudou in November 2015. 


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