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Hike looking to raise capital from WeChat-parent Tencent, to take on Whatsapp and expand its rather petite userbase

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Where do you go when you are a David looking to take upon a Goliath? You raise funds to buy a better sling ofcourse, at least if you are smart. Messaging service Hike is doing just that and is apparently in talks with China’s Tencent Holdings Ltd to muster a fresh round of funds.

The company will seek to deploy the funds to take up its ever-lasting herculean task of catching up with Facebook owned WhatsApp, which is currently well-entrenched in its ace position among IM services in India and of course, globally.

As per LiveMint, which claims to have gotten its information from two people close to the development, Hike will be looking to raise at least $100 million in a round that may also see participation from its existing investors, Tiger Global Management and Bharti SoftBank.

While Tencent’s interest in Hike may seem unnatural considering that it owns the WeChat messaging service, the fact that WeChat failed badly in its attempt of shaking WhatsApp from its pole position has led the company to explore other avenues. These other avenues include linking arms with a local player that already has a significant presence in the country.

According to one of the two people cited by Mint, who spoke on the condition of anonymity

Tencent came to India on its own and invested several million dollars in advertising and promotion, but was unable to make any dent in the market. Given that, it thinks partnering with a domestic player gives it access to a captive customer base that it can leverage. It has identified India as a key market for growth.

Well, India seems to have become a field of battle for all these gigantic corporations. Companies such as Uber and Didi Chuxing, Amazon and Alibaba are using the country to battle it out. Uber and Amazon have completely dominated their domestic markets, as have Alibaba and Didi. Now, in their bid for global supremacy, India has the potential to tip the scales either way. Hence the sudden interest in Indian start-ups. After all, you must be familiar with the old adage “The enemy of my enemy is my friend”. Over the past one year, Alibaba has invested in two of Amazon’s biggest rivals, Snapdeal and Paytm and the last we heard, was considering putting money into Flipkart.

Similarly, Didi Chuxing also bought up some of Ola’s stakes last September so as to assist it in taking upon Uber. So you see, Tencent putting money into Hike wouldn’t be all that surprising.

You may not be aware of the fact, but back in the day, Hike was actually one of the most popular IM service in the country. However, with the advent of WhatsApp and Facebook’s messenger push, Hike appears to have lost its edge somewhere. The platform has around 100 million users which while impressive, are still far less than WhatsApp’s over 1 Billion or Messenger’s 900 million or so.

So yes, approaching Tencent certainly makes sense. Not only will Tencent be able to assist them financially but Hike may also be able to draw some pointers from the former’s significant portfolio of games, commerce, content and messaging services. There hasn’t been an official word on the topic yet, but we will be sure to keep you updated.

Stay Tuned!

A bibliophile and a business enthusiast.

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