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China's prank video app is common man's unicorn

[HONG KONG] A Chinese amateur video app has turned into an A-list unicorn. Kuaishou is raising US$1 billion from heavyweights including Tencent , Reuters reported on Jan 25 citing sources, at an eye-popping US$18 billion valuation. Competition is fierce, and censorship intense. This fuse could burn quickly.

Kuaishou, which means "fast hand", was last valued at US$3 billion less than a year ago, according to media reports. The app, similar to Twitter's Periscope, is one of the fastest growing social networks in the People's Republic. Monthly active users hit 204 million by the end of December, up over 80 per cent from a year earlier, according to QuestMobile.

Kuaishou's latest round implies a price of US$88 per monthly active user, compared to roughly US$71 per Tweeter. That reflects optimism over Chinese people's increasing willingness to pay for live-streaming videos; a market iResearch expects to hit US$11 billion in revenue this year.

The business model is unusual. Take Kuaishou's rival Momo , already listed in New York. Momo lures users by letting them chat with its stable of online stars for free. But for a few impulsive yuan, devoted fans can buy animated cat ears to mount on a broadcaster's head, or send them virtual flowers. The company splits the revenue with the video hosts. Such tiny transactions add up: Jefferies analysts expect revenue from Momo's live videos to touch US$1.1 billion in 2017.

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Kuaishou doesn't disclose financial details. But based on the implied value per user, the startup looks pricey compared to the US$5.5 billion Momo, with roughly 90 million monthly active users. Momo boasts a lucrative cast of online personalities; Kuaishou relies mostly on home videos of people stuffing firecrackers down their pants or performing magic tricks.

Competitors are pouring in. Popular news feed app Toutiao recently launched two video platforms offering similar content, and they are catching up fast. China's censors are also cracking down on apps hosting vulgar content - such as clips of women seductively eating bananas - or promoting dangerous behaviour. In December, state media lashed out at video-streaming platforms for hosting footage of a young daredevil falling to his death. Kuaishou could fizzle soon.

China's Kuaishou, which operates a popular video-sharing platform of the same name, is close to raising US$1 billion in a funding round that would value the company at about $18 billion, sources told Reuters on Jan 25. Tech giant Tencent and venture capital firm Sequoia Capital China are among the investors.

The seven-year old company, whose name translates to "fast hand", could list as soon as this year, preferably in Hong Kong, the sources said.

Kuaishou is one of the fastest-growing apps in China in terms of user traffic. At the end of 2017, it had 204 million monthly active users, according to data tracker QuestMobile, up 80 percent from a year earlier.

REUTERS

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