56.com aims to become YouTube of China, raises $20M
While YouTube ran away with the video-sharing crown in the United States, the race is still pretty heated in China, the world’s second largest Internet market and its fastest-growing.
There, two leaders are fighting it out, Tudou.com and 56.com. Tudou commands 22 percent of searches on China’s most popular search engine Baidu, compared to 56.com, which attracted 19 percent. In third place is Youku.com, with 13.9 percent.
56.com seeks to catch Tudou, today announcing it has raised $20 million in venture capital, led by Hikari Private Equity and Susquehanna International Group China.
Tudou got ahead early, and was helped after raising $19 million venture capital in July. It also dominated because it was quick to let people easily upload video they’d taken from TV or ripped from other places. 56.com, on the other hand, was quick to let Chinese upload their photos and turn them into slideshows. Unlike in the U.S., where people are easier with uploading videos of themselves, the Chinese tend to be somewhat more reserved, but are easier with uploading photos and turning them into videos via slideshows. Todou has since moved to embrace slideshows too.
Also investing in 56.com are Adobe Systems Incorporated and the CID Group, and previous investors Sequoia Capital and Steamboat Ventures, the venture capital firm affiliated with the Walt Disney Company.
Youku, meanwhile, has raised $28 million (see our coverage) from Farallon Capital, Bain Capital’s Brookside Capital Partners, Chengwei Ventures and Sutter Hill Ventures.
Tudou.com is backed by Capital Today, General Catalyst Partners, Granite Global Ventures, IDG China, JAFCO Asia, KTB Ventures and JAIC.
56.com is using compression technology that keeps its bandwidth costs lower, compared to other sites, it says. It is also planning to bring on the former chief financial officer of Tom.com as chief executive. 56.com is led by former executives of Netease, who have focused on making an easy user experience. The company also hopes to draw on the expertise of the new investors such as Adobe, a person close to the deal told us.
Source: VentureBeat