Tencent Backs its Former QQ Head’s Zoom-for-Business Startup
(Bloomberg) -- Tencent Holdings Ltd. led a $50 million investment in real-time communications software developer Zego, underscoring widespread interest in online education and videoconferencing in the post-pandemic era.
The Shenzhen-based startup’s financing round was also joined by existing backers Qiming Venture Partners and IDG Capital, Zego said. The company -- now part of Tencent’s massive investment portfolio -- didn’t disclose its latest valuation.
Zego is competing in a burgeoning enterprise software sector with rivals including Agora Inc., which raised $350 million in a U.S. listing in June. They offer real-time voice and video technology that powers game streaming platforms, online classes and, increasingly, enterprises that had to adapt to remote work during and after Covid-19 disruptions. Globally, the so-called communications platform-as-a-service market is expected to grow from $3 billion in 2018 to more than $17 billion in 2023, according to IDC estimates.
“We experienced a boom in these use cases during the pandemic, because people started to realize there’s work and errands you can’t do offline,” said Zego co-founder and Chief Executive Officer Lin Youyao in a phone interview.
After 13 years at Tencent, where he last headed up the internet giant’s QQ messaging app, Lin founded Zego in 2015 with a group of former colleagues. He says the company’s revenue is on track to double this year, and it has been profitable since 2016, without disclosing specific figures.
The company has a team of around 400 people and 80% of them work in tech, the CEO said. Zego has provided tech solutions to more than 1,000 customers including Weibo Corp. and TAL Education Group since its inception and it also runs a Zoom-style videoconferencing platform called TalkLine, according to the company.
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