Alibaba

Tango raises $280 million, as mobile messaging wars heat up

March 20, 2014: 12:01 AM ET

Alibaba leads a $280 million VC round for Tango, on the heels of Facebook's $19 billion deal for WhatsApp.

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FORTUNE  -- Tango, an app for text and video mobile messaging, has raised a whopping $280 million in new venture capital funding. Alibaba Group led the round with a $215 million commitment, in exchange for a minority stake. The remainder was filled out by existing Tango investors, who previously had disbursed $80 million.

A source familiar with the situation says that the deal values Tango in excess of $1 billion. The company itself is not discussing valuation, except to say that it was not really affected by the Facebook-WhatsApp deal.

"We were pretty much all done when that happened," explains Tango co-founder and CTO Eric Setton. "I think, in general, that the WhatsApp deal made everyone feel pretty good, in terms of the amount of attention on the space and the remarkable valuations everyone is seeing. The original Web generation was won over by search, but the mobile generation isn't about search or even the app store. It's about mobile messaging, where they're checking 40 times per day, and that gives us the opportunity to bring them into other experiences."

It's those other experiences that Setton believes helps set Tango apart from a company like WhatsApp, which has remained almost exclusively focused on messaging. For example, Tango users can share music or play games against one another. This could become increasingly important as more and more mobile users around the world get unlimited data plans.

"In the U.S. right now, for example, consumers don't really feel the price per text message," Setton explains. "So it's really about giving them something orthogonal to what they get from the carriers."

Expect much of the funding to go toward hiring, including for its office in Beijing -- thus helping to explain the involvement of Alibaba. Michael Zeisser, Alibaba's chairman of U.S. investments, has joined the Tango board of directors as part of the deal. Setton says that he was particularly attracted to Alibaba because it has grown so large as a privately-held enterprise in which its founders still have a large impact. It's probably also worth noting that Alibaba is preparing to go public later this year, although Setton didn't want to talk about IPO prospects for his own company.

In addition to the funding announcement, Tango says that it recently passed the 200 million "member" mark, which includes 70 million active monthly users. For context, WhatsApp reports 450 million active users, while China's WeChat (owned by Tencent) reports 355 million active users (note: definitions of "active" may vary from company to company).

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