Content, as they say, is king — but these days, that may be true only for as long as you can figure out a good business model to deliver it. And today, a startup based out of Toronto, Canada is re-upping its coffers to fill out its ambition to do just that.
Wattpad, a storytelling and reading/viewing app that combines crowdsourced content with professionally produced material, has picked up another $51 million (C$61.25 million) in venture funding — money that it plans to use to invest in its tech (such as the machine learning that helps match its creators with consumers, and which identifies stories that are ‘trending’ and worth revisiting for more creative writing and video shooting around them as themes); and in its expansion into more formats.
The company has raised $117.8 million (US) to date, and while it’s not publicly disclosing its valuation, according to PitchBook (which I’ve found is very reliable), post-money it is valued at just under $398 million.
“Entertainment is in a period of disruption, and how people find and experience stories is evolving,” Allen Lau, the CEO who co-founded the company with Ivan Yuen, said in a statement. “With our global community of users, hundreds of millions of stories and data-driven approach to helping people and partners find great content, Wattpad is leading both sides of this equation. We empower diverse storytellers all over the world, helping them build a community of passionate readers; at the same time, we also connect Hollywood with stories that have massive built-in audiences.”
Last year, the company added video (a crowded market, considering the huge elephant called YouTube in the room), and a paid subscription tier, and today said that it’s keen to do more across the board, in TV, film, digital media and publishing.
So far, Wattpad has proven out its model in the form of user growth. Its community grew over 40 percent in 2017, it said, and now has 65 million users globally with story uploads now at 400 million.
Notably, it appears that a lot of that growth continues to come from Asia, judging by the investors in this round.
It includes Tencent (owner of WeChat and a big investor in Snapchat and generally a huge player in digital media in China); Kickstart Ventures, which is part of Globe Telecom out of the Philippines (where Wattpad has been popular for years); and the Peterson Group out of Hong Kong.
“Wattpad has built a creative community for storytellers and story lovers,” said Martin Lau, President of Tencent Holdings Limited, in a statement (no relation between the two Lau’s, it seems). “The company is providing opportunities to new and established writers, transforming how entertainment is discovered and produced. We are glad to support Wattpad, a leader in digitizing and data enhancing the entertainment industry.”
Others include BDC (the Canadian government’s bank dedicated to funding and promoting Canadian businesses at home and especially abroad), Peterson Group, and existing investor Raine, the London-based firm that has invested in other digital media firms like Vice and Soundcloud, and also has ties to Asia, in that it advised Japan’s Softbank on its acquisition of Sprint. Previous investors also include Union Square Ventures, Khosla, AME Cloud Ventures, August Capital and others.
While one side of Wattpad’s business is based on work that people upload to the platform, it’s also tied in with a few big names both in terms of sourcing material and then subsequent distribution both in print and in video. Back in 2007 when it was just starting out, it inked a deal to distribute 17,000 titles on mobile from the Project Gutenberg; and it partnerships with NBCUniversal’s Universal Cable Productions (UCP), eOne and CW Seed. Other publisher partners include HarperCollins, Hachette Audio and Hachette Romans.
It will be interesting to see how Wattpad continues to build out the business longer term. There have been a number of companies in the wider media space that have reached lofty valuations on big hopes of disrupting the world by mixing in tech alongside compelling content; but some of that has not quite played out how founders and investors have expected.
The key thing here, it seems, is the audience of creators and consumers willing to use its platform to connect with each other, and the attractiveness (to investors) of that relationship and the platform that encourages it.
“Wattpad has developed something truly special: a community that cares deeply about stories of authentic human experiences, a technology platform that unlocks the universal desire to share those stories and connect with other people, and a data set that enhances the value of these shared stories for writers and readers alike,” said Minette Navarrete, President, Kickstart Ventures, in a statement. “We’re proud to join Wattpad as an investor, helping expand its vision to entertain and connect the world through stories.”
“Wattpad is the future of entertainment,” added Peter Misek of BDC. “By harnessing the power of verticalized data and AI, Wattpad has unlocked the true value of content creation, enabling discovery, production and distribution in exponentially new ways. The future can be found on Wattpad.”
We’re hoping to speak with Wattpad’s CEO Allen Lau later and will update this post as and when we do with any more insights.