China streaming and social media giant Tencent has led a $54 million funding round for the app company that offers artists a karaoke-style tool to interact with fans, Smule.
Based in San Francisco, Smule allows users to record and layer on duets with top artists like Ed Sheeran through its flagship app Sing! Karaoke.
Artists upload their audio onto the platform to interact with fans and promote their music.
The tool can have a big influence on sales —after Luke Bryan posted a video duet with Jason Derulo of the song Want To Want Me, it doubled its sales for the week, according to Reuters.
The investment will be used to finance international expansion with a focus on Asia, leveraging the reach of Tencent in the region.
Existing investors Adams Street Partners and Bessemer Ventures also joined in the round that has reportedly valued the company, which is planning an IPO, at $604m.
Smule earned $101m in revenue last year.
A third of its 52m monthly active users are in North America, with 40% based in Southeast Asia.
“We’ve seen significant growth in Southeast Asia in the past few years. We want to leverage some of the work that Tencent has done in China.”
jeffrey smith, smule
“We’ve seen significant growth in Southeast Asia in the past few years,” said Smule Chief Executive Jeffrey Smith.
“(The region) is very important to the future of the internet, and we want to leverage some of the work that Tencent has done in China.”
“We are confident that our investment in Smule will further strengthen our position to capture the promising potential in the digital music market.”
poshu yeung, tencent
Poshu Yeung, Tencent’s Vice President of International Business, added: “We are confident that our investment in Smule will further strengthen our position to capture the promising potential in the digital music market.”
Tencent has an imperious market cap valuation of more than $250bn.
It also happens to be the world’s third-biggest music subscription business – one which poses a serious threat to the global ambitions of Spotify and Apple Music.
Last year, Tencent spent big to acquire a majority stake in $2.7bn-valued China Music Corp, taking control of two key music platforms – Kuwo and KuGou.
Added together with its own QQ Music, which boasts 200m monthly active users, Tencent now services over 15m paying music subscribers – with an estimated digital music market-share in China of over 77%.
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