Tango, the mobile messaging application that allows users to text, play games and make free voice and video calls, is today announcing $280 million in Series D funding, in a round led by China’s Alibaba. The landmark round will give Alibaba, a company best known for dominating China’s e-commerce landscape, a minority stake in Tango, contributing $215 million. To date, Tango has raised $367 million.
The company declined to share its current valuation.
Today, Tango has 200 million registered users, and 70 million monthly actives, generally aged 25 to 45.
According to co-founder and CTO Eric Setton, Facebook’s acquisition of WhatsApp opened people’s eyes to the value that messaging apps can create. “Messaging apps can go beyond communications, and can be used to discover new things like games, music and other content,” he says. “At Tango, we’re facilitating this discovery with our content platform and social networking features combined with communications.”
For background, Mountain View-based Tango, founded in 2009, began as something of an Apple FaceTime competitor, at a time when FaceTime was limited to specific iPhone models and required Wi-Fi to work. Tango came in with an alternative service that allowed users to make video calls on iOS or Android, and over 3G networks. In the years since, the company has been evolving its platform to offer more communication features, including things like photo-sharing, music-sharing, voice and video messages, and even gaming. An in-app store sells upgrades like stickers and other decorations, and Tango’s ad platform, launched in December, is “well above industry averages” in terms of click-thru rates and conversations, the company tells us.
Tango users have also been able to play games with in the app for some time. Gaming, as it turns out, is a popular activity for many mobile messaging users these days, especially on competing networks popular in parts of Asia, like Line, which is big in Japan, and Chinese messaging service WeChat.
And last year, Tango began to transition more seriously into mobile gaming, with its own Tango-powered iOS games, built in-house, as well as those built by partners using the Tango SDK launched in June 2013. This allowed third-party developers a way to offer social features within their applications, without relying on things like Facebook Connect, for example.
Today, that content platform has grown to 40 content and and gaming partners who share revenue back with Tango from in-app purchases on the Tango platform.
Not entirely coincidentally, Tango’s lead investor Alibaba recently announced its intentions to build a mobile gaming network to compete with rival Tencent, makers of WeChat. China today has one of the world’s largest gaming markets, with over 490 million users, and a market size of roughly $13.7 billion. It makes sense, then, that it would take a stake in something like Tango, which has been rapidly growing both its mobile messaging user base and its mobile gaming footprint.
Setton confirms that gaming is, in fact, a big part of Tango’s strategy going forward, explaining that Tango is different from utility messengers focused on just communications.
“Content can be the pretext for conversation, and because of that – we’re going after a very big opportunity here. We need to be well capitalized to do it,” he says. “With this funding we will have the opportunity to pursue further content partnerships. Think about AAA game titles or world-renowned artists that we can sign up to Tango’s platform.”
Though Tango and Alibaba’s interests align when it comes to mobile gaming, Tango doesn’t yet have a significant stake in China, with 31% of users from North America, 20% from Asia, 12% from Europe, 29% from the Middle East, and 8% from everywhere else. But Setton believes that will now change following this investment, and the exposure it will provide Tango, whose app, he says, takes a similar approach to other messaging apps popular throughout Asia, including Kakao, Line and WeChat.
“Alibaba not only provides great expertise, leadership and strategic support in helping us scale our business, but they also help us by providing a unique view into the Asian markets which are a couple years ahead in mobile messaging,” says Setton. That being said, he admits the messaging space is the most competitive on the market today, and requires effort as well as “tremendous financial means.” The company plans to use the funding for further product innovations, hiring, aggressively expansion of its content partnerships, and development of its platform.