Messaging App Kik Joins The Unicorn Club

Ontario-based messaging app Kik has just crossed the threshold into unicorn territory, as its latest $50 million funding round has officially knocked its value to $1 billion.

The funding came via Chinese digital economy player Tencent — owner of the tremendously popular WeChat app. Kik currently has 240 million registered users (there are no figures as to how many are active) and aims to be the “WeChat of the West” by offering not just a communications platform but an online destination hub for all sorts of digital activity (shopping, banking, paying bills, consuming media, etc.). However, Kik also faces some steep competition from established players like Facebook and its two messaging applications and Snapchat, a longer-established unicorn startup.

Facing that highly competitive marketplace, Kik’s executive team, aided by Qatalyst Partners, has spent the last year scouting a next move and a possible partner — for either investment or sale. That search led to Tencent.

“They, more than anyone in the world, have accomplished in that market what we want to accomplish here in the U.S.,” Kik CEO Ted Livingston said. It helped that Tencent was agreeable to an investment as opposed to a wholesale acquisition. “It would let us stay independent and stay hungry,” Livingston added. Additionally, Livingston appreciated Tencent’s long-term view on the move. “Financially, they could afford patience,” he said. “We don’t want to just build a chat app. It’s the whole chat ecosystem. Other partners would take a short-term view.”

Kik, though it now wields an impressive valuation, still has some intense work ahead of it. The company has only recently begun monetizing. But Kik has an interesting special feature: They do not require a phone number to text message, making it a popular option for teenagers (particularly young teenagers) that don’t have phones but do have a tablet or an iPod Touch. Since teens have something of a herd mentality, the service spread quickly.

“If you ask people why they use Kik, the number one answer, and there is no number two answer, is that it’s what their friends use,” Livingston said.

Kik previously raised $70.5 million in venture funding. The company plans to use the new investment to double its 100-person team over the next year.

It should be noted Tencent likes to invest. The Chinese firm participated in Snapchat’s $80 million Series B round of funding.

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