Canadian story-sharing platform Wattpad Corp. closed a funding round of $51-million (U.S.) led by Chinese internet giant Tencent Holdings Ltd.
The funding, first reported by The Globe and Mail, will be used to expand the company's global entertainment effort, increase machine-learning activities and hire more workers.
The round values Wattpad at about $400-million, according to people familiar with the matter. Other investors include the Business Development Bank of Canada, Philippines-based Globe Telecom Inc.'s subsidiary Kickstart Ventures, Hong Kong-based Peterson Group and existing investor Raine Ventures LLC, the company said.
The Toronto-based startup has 65 million users who write and share stories around the world, according to a statement from the company. To date, the company said it has raised $118-million from investors across Asia, the United States and Canada, including OMERS Ventures Management Inc., Khosla Ventures LLC and August Capital Corp.
"We know entertainment is in a period of disruption, but always need great stories, and we have a ton of them with a built-on audience," Wattpad chief executive officer Allen Lau said in an interview with The Globe and Mail on Wednesday. "As we expand from our core app serving a community of storytellers and readers to other platforms, we find Tencent is a perfect match for us ... there is a lot we can learn from them."
Wattpad plans to use the new capital to invest in machine-learning capabilities "to help us find the best stories that would be good for our users. That is crucial," Mr. Lau said, adding the platform now has 400 million stories uploaded from users who generate over 1 billion data points every day. "Machine learning can help us swim in this sea of data."
Mr. Lau said the company will also use the money to expand other entertainment platforms, including a new app it launched last year called Tap, which it calls an immersive storytelling experience that delivers short, conversational-style narratives, including video.
Wattpad has also set up a production studio to turn its stories into movies and TV shows. The company is a partner with Universal Cable Productions, a division of NBCUniversal Cable Entertainment; Entertainment One Ltd.; and CW Network LLC's digital network CW Seed, and works with publishing houses. Stories on the platform have been published as bestseller books and others have been adapted or licensed for film or TV.
Mr. Lau told The Globe that Wattpad's core app is already profitable and "we have no plans to raise another round. We have sufficient cash to finance our expansion."
Tencent invested in several other Canadian companies last year, including taking part in a $102-million funding round for Montreal-based Element AI Inc. and investing $28-million in Kindred Systems Inc., an AI robot-manufacturing startup based in Toronto. The Chinese giant also invested in Kik Interactive Inc., the Canadian instant messaging startup, in 2015.
A Tencent spokesman didn't immediately return a request for comment.
With files from Globe and Mail reporter Sean Silcoff