China’s Toutiao Buys California’s Flipagram

(Beijing) — A highflying Chinese news-aggregation app has acquired the popular U.S. video-creation platform Flipagram, making a further foray into foreign markets as competition at home intensifies.

News-distribution app Jinri Toutiao acquired the Los Angeles-based video startup for an undisclosed amount, according to a statement released on Wednesday.

The tie-up will allow Flipagram to use Toutiao’s technology to provide tailored videos for its users and gain access to Toutiao’s 175 million monthly active users.

Flipagram, which lets users stitch together several videos and images, was considered a threat to Instagram when it launched in late 2013. However, the company has struggled to form a social networking community with its users.

The company has been quiet since it raised $70 million from venture capital firms Sequoia, Kleiner Perkins and Index Ventures in 2015. Recode, a technology news website, first reported in December that the video-app company was looking for a buyer and was in talks with Toutiao.

“Today we are thrilled to take the next step in our journey with Toutiao, whose expertise in content recommendations can help take the Flipagram mobile video network to the next level,” Flipagram co-founder and CEO Farhad Mohit said in the Wednesday statement.

Founded in 2012, Toutiao, which means “headlines” in Mandarin, has become the country’s most popular news-aggregation app with the most weekly active users, according to Cheetah Mobile’s research institution. The app provides customized content for users by analyzing their interactions with the content served. In the most recent publicly announced funding round in 2014, the company raised $100 million, which valued it at $500 million. Investors included microblogging service Weibo Corp. and Sequoia’s China operations.

Toutiao’s parent company, Beijing Bytedance Technology Co. Ltd., is aiming to raise $1 billion in its latest round of fundraising, The Wall Street Journal reported in November, citing unidentified sources with knowledge of the matter. The round would boost Toutiao’s value to more than $8 billion.

Despite abundant funding, fierce competition at home has prompted Toutiao to tap foreign markets. Some runners-up in the news-aggregation apps sector in China include Tiantian Kuaibao — backed by social media and gaming giant Tencent Holdings Ltd. — and e-commerce company Alibaba Group Holding Ltd.’s UC Toutiao.

Bytedance led a $25 million fundraising for India’s largest news aggregator, Dailyhunt, in October. Toutiao founder and CEO Zhang Yiming said in November that globalization will be one of the company’s “core strategies” in 2017.

Contact reporter Chen Na (nachen@caixin.com)