China streaming app plots bumper IPO

Asia Innovations chief executive tells FinanceAsia he wants to close a multibillion-dollar IPO before the end of next year.

Asia Innovations Group, the Chinese app developer that runs live streaming platform Up Live, is eyeing an initial public offering that could value the company at “several billion dollars”, the company’s co-founder told FinanceAsia.

Asia Innovations has already gone through four private fundraising rounds, achieving a valuation of $250 million at its last round in 2016. But Andy Tian, co-founder and chief executive of the company, has a much more ambitious plan: he says he wants to achieve a multibillion dollar valuation before the end of 2018.

The company, one of several start-ups attempting to profit from the live-streaming craze, plans to list in either New York or Hong Kong, Tian said.

Up Live launched last June and has already attracted over 10 million users, the majority from regions outside mainland China, Tian said. Users can watch streamers — often attractive women — and buy them virtual gifts, a portion of which goes to the company itself.

These virtual gifts, which range from images of flowers to private jets, are priced between $0.3 to $148 on the platform.

The majority of the company’s revenue comes from Chinese speaking countries, but sales are growing at between 30% to 50% in Arab markets and doubling in Japan every month, according to Tian. With a monthly growth rate of over 10%, Tian thinks the app’s annual sales will reach $200 million in 2017, although he declined to disclose current figures.

Stream on

The streaming sector has become a new battlefield for technology startups in China, with over 500 live video apps competing in the $2 billion domestic market. Tian thinks the country’s increasingly tech-savvy investor and user base has been a natural fit for the sector.

“Innovations from China are surpassing that of the West, as you see, especially in terms of mobile and technology and also business models. Apps Like WeChat, apps like bike-sharing, we’re way passing the US,” Tian said. “China live streaming on PC has been around for roughly ten years. That’s where the growth is. But PC-based live streaming in US in the West has not been around that long.”

In March, a leading live streaming app, Kuaishou, raised $350 million from investors including Tencent

While recognising the live entertainment boom in China, Tian said Up Live’s focus is expanding into the international market, where he thinks the company’s international background can have a more competitive edge.

Available in more than 100 countries, Up Live now ranks as the No. 1 live streaming app in Taiwan and a few Arabic countries, where Tian felt there was a lack of social platforms because of language barriers.

“Frankly in China everything is over-competitive, super competitive. It kind of distorts the landscape. I think internationally the market is less competitive,” Tian said. “Successful factors in China a lot of the time don’t really translate into success in the international [arena]. But we see that as our advantage because we can go cross-culture. And I want to be able to bring the best Chinese mobile products, business models and technologies to the international market.”

Tian was born in Chengdu and migrated to the US at the age of ten. He graduated from Massachusetts Institute of Technology and worked in Silicon Valley before moving back to China in 2000. His partner, Ouyang Yun, was second-in-command at Tencent’s corporate strategy department before co-founding Asia Innovations.

Tian said such background has given Asia Innovations access to playbooks from both the East and the West, allowing the company to receive investment from Kleiner Perkins Caufield & Byers, Queen’s Road Capital and Wicklow Capital. The company has already got money from prominent individual investors, including Joe Lonsdale, co-founder of Palantir, Justin Waldron, co-founder of Zygna, and a few individuals from Google and Facebook.

YY, one of China's leading live streaming platforms, has a market capitalisation of $3.2 billion. Live streaming contributed to 85.7% of its $1.2 billion sales in 2016. Another Chinese social network app, Momo, has a current market cap of $7.5 billion. Its sales grew from $134 million to $553 million after it introduced live streaming into its social network app last year.

Momo and YY are both listed in New York.

¬ Haymarket Media Limited. All rights reserved.
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