A mobile content platform backed by two of China’s biggest firms, Alibaba and Tencent, Qutoutiao announced a USD 100 million B round of funding raised by its subsidiary Midu. Midu operates the online literature apps Midu Novels and Midu Novels Lite.
This round of investment was led by CMC capital with the parent company participating as well. Qutoutiao the controlling shareholder, also said that Midu Novels has undertaken various product upgrades since July 16 when it was suspended along with two other major reading apps for allowing sexually suggestive content. According to technode the funds raised will be used for acquiring content, constructing a content creator ecosystem, and marketing purposes.
Midu raised its series A round of financing of USD 14 million just two months ago.
“Midu continues to play a crucial part in Qutoutiao’s overall content platform strategy. We have a clear roadmap ahead for Midu, and our objectives of reaching more than 10 million DAUs by the end of the year and becoming the largest online literature platform in China by 2020 remain unchanged,” said Tan Siliang, Chairman and CEO of Qutoutiao.
According to 36Kr, the company stated during its Q2 earnings call that it expects 10 million to 15 million total DAU by year-end for Midu Novels and Midu Novels Lite, and daily revenue of RMB 2 million to RMB 3 million.
Midu might have raised a comparatively huge amount of funds but there is plenty of competition in this field. One of the biggest competitors being Baidu-backed Qimao which, in April (again according to 36Kr), was the most downloaded app in Apple’s App Store in China, beating both of ByteDance’s popular products Douyin (known as Tiktok abroad) and Toutiao, a news and content aggregator.
According to a report released by QuestMobile as of May, “Free reading model has altered the industrial landscape and contributed to a large number of users in a short period of time.”
Peter Li, partner of CMC, commented: “With its pioneering free-to-read model and dedicated execution capability, Midu has emerged as a leading player in the competitive online literature market with strong growth momentum. We are excited about the tremendous market opportunities in the online literature market and optimistic about Midu’s future.”