ByteDance to invest $165m in Chinese e-book reader Zhangyue

TikTok’s parent company ByteDance has agreed to invest 1.1 billion yuan (US$165.6 million) for a 11.23% stake in Chinese e-book reader and publisher Zhangyue, also known as iReader, according to a Shanghai Stock Exchange filing.

The funding will be done through ByteDance’s wholly owned subsidiary company, Beijing Liangzi Yuedong Technology Co Ltd.

Photo credit: Zhangyue

ByteDance became popular through its short-video sharing platform TikTok and its Chinese version, Douyin. The company also recently ventured into enterprise software via its Lark app and online education with its Dali Education brand.

Founded in 2008, Zhangyue operates an app that lets users access novels, audiobooks, anime, among others. It expanded into global market in 2015.

On its website, the company says it has 110 million monthly active uses. Zhangyue is currently valued at US$1.65 billion, according to PitchBook.

For the first three quarters ended in September, the company generated 1.5 billion yuan (US$225.8 million) in revenue, increasing by 7.8% from 1.4 billion yuan (US$210.7 million) during the same period last year. It also recorded a net profit of 166.1 million yuan (US$25 million) during the period this year.

Zhangyue is up against Tencent spinoff China Literature and Kuaidian, which raised almost US$100 million in July from investors led by Sequoia Capital China. Earlier backers GGV Capital and Morningside Venture Capital also joined the round.

A Statista report estimated that by 2020, the online literature market in China will reach around 20.6 billion yuan (US$3.1 billion) in revenue, up from 15.4 billion yuan (US$2.3 billion) in 2018.

Currency converted from Chinese yuan to US dollar: US$1 = 6.64 yuan.