Alibaba splashes $171 million on content aggregator Qutoutiao

By targeting China’s population beyond the country’s metropolises, Qutoutiao has secured a loyal following.

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Alibaba splashes $171 million on content aggregator Qutoutiao

China’s second-most popular news aggregation app has secured hefty financing from Alibaba Group.

Qutoutiao, which translates to “fun headlines,” has received a USD 171 million convertible note at 3% interest rate from Alibaba, which has the option to convert the loan into a roughly 4% ownership stake in the mobile news aggregator.

If the loan is converted into shares, Qutoutiao’s value would stand at about USD 4.25 billion. It would also give Alibaba an ownership stake alongside Tencent, which led a USD 100 million round into Qutoutiao one year ago, granting the aggregator unicorn status.

Launched in June 2016, Qutoutiao made a name for itself by catering to China’s lower-tier cities, which make up the bulk of the country and where people tend to spend more time online. The platform’s content consists mainly of easily digestible and light entertainment, tailored specifically for the preferences of users in these cities. User growth and retention are cultivated through loyalty points that can be earned by referring new users, or by consuming and engaging with content, and can then be redeemed for small amounts of real money.

In September 2018, Qutoutiao raised USD 84 million in a public offering on the Nasdaq. At the time, chief strategy officer Oliver Chen said that the main purpose of the IPO was to build brand awareness as the platform prepares to expand to second- and first-tier markets, and potentially overseas.

This round of financing from Alibaba will give Qutoutiao’s brand a further boost as it looks to compete more directly against ByteDance’s Jinri Toutiao, China’s largest mobile news aggregation app. Jinri Toutiao claimed that it has 120 million daily users in August 2018, and is a contender to the Baidu-Alibaba-Tencent triumvirate.

After reporting staggering earnings numbers in the fourth quarter of 2018, Qutoutiao seems to be on course toward challenging Jinri Toutiao: Monthly users were up 286% to 93.8 million, daily users increased 224% to 30.9 million, time spent in-app per daily user increased 96% to 63 minutes, and net revenues soared 426% to USD 193 million.