Though neither side is giving a price, you would imagine that it is more than what Kik paid for GIF Relay, its first acquisition from 2014, given that Rounds had raised over $20 million from investors and claimed 40 million registered users. Kik boasts over 300 million users and is particularly popular among teens. It doesn’t disclose monthly user numbers but some reports have pegged its engagement alongside that of Snapchat.
Kik CEO Ted Livingston declined to give us a price, but local media in Israeli reported it is in the region of $60-$80 million. It’s fair to say that Kik has that kind of money to spend. It has raised $120 million to date, including its most recent $50 million raise from China’s Tencent at a $1 billion valuation, and keeps costs low by being located in Canada.
What’s more certain is that the deal will immediately bolster Kik’s tech team. The Canadian company is acquiring all 35 staff from Rounds, and turning its Tel Aviv office into a Kik product and engineering center, and its first international base. Kik, which is headquartered in Waterloo, said that it has opened a similar base in Toronto, too. Those additions take Kik’s total headcount to 165 staff, but the firm said it is actively hiring for more staff.
Interestingly, the two companies didn’t wait for this deal before combining forces. A Kik representative confirmed to us that Rounds was responsible for the technology behind Kik’s new video chat feature, which was launched out in December. So it looks like we can expect more video features to roll out soon.
“The team at Rounds knows how to build products that make chat fun and entertaining for our teen audience. The company has very strong product and engineering experience, and we’re excited to join forces to achieve our goal of making chat the central hub for everyday life,” Livingston said in a statement.
Founded in 2009, Rounds offered a unique experience at the time — enabling up to 12 people to engage in live chat, with the option to do things like playing games, reading stories and more together. That’s now a hot space, with startups like Houseparty (formerly Meerkat) starting to take off with young people, which does rise questions as to why Rounds has been sold.
“We saw Kik as the perfect partner to expand our reach to such a vast audience” gushed Rounds CEO and co-founder Dany Fishel in a canned comment.
“It’s rare when two companies share a similar culture and vision of connecting people through fun, meaningful experiences, and we’re eager to build the next great platform together,” Fishel added.