Tango's $280M VC Cash Infusion Shows Power of Messaging

NEWS ANALYSIS: Tremendous growth is happening in the sector because it's all about being a trusted brand on the device enabling communication.

To say that messaging apps are all the rage in mergers, acquisitions and venture capital interest at this time would be a massive understatement.

Last November, Snapchat turned down a $3 billion buyout offer from Facebook. Undeterred, the huge social network then turned around and bought competing messenger WhatsApp for $19 billion on Feb. 19.

LINE, another hot messaging app service, is dominating the Japanese market and has suitors sniffing around. WeChat and KakaoTalk are adding thousands of users daily.

Now Tango, a Mountain View, Calif.-based mobile messaging service, revealed March 20 that it has closed a whopping $280 million round of funding, led by China's Alibaba Group with $215 million. An additional $65 million will go into the bank from some of Tango's earlier investors.

Including the new round, Tango has raised $367 million in venture capital financing in five years.

All-in-One Messaging App

Like WhatsApp and others, Tango offers free video and voice calling and texting available cross-platform over 3G, 4G and WiFi. Over the past year, Tango has evolved into a next-generation mobile messaging app that blends communication, social networking and content creation into a single platform.

Tango's move to an all-in-one messaging, social and content platform has helped double registered users to 200 million compared with a year ago. Active monthly users have reached 70 million, the company said.

Five-year-old Tango has exhibited tremendous growth because of its singular approach to combine free communications, social and content, said Joe Tsai, executive vice chairman of Alibaba Group.

Messaging app usage, which is defined as a user launching an app and beginning and ending a session, has been fast increasing in all age and geographic categories for the last half-dozen years.

Messaging Market Zoomed Up 203 Percent in 2013

San Francisco-based industry analyst Flurry Analytics reported in January that messaging was the fastest-growing mobile app category in 2013, zooming up an incredible 203 percent over the previous year. That's nearly twice as fast as the overall mobile app growth rate of 115 percent and well beyond the 149 percent growth of the No. 2 category: utilities and productivity.

Since Tango rolled out social networking features last July, daily engagement has doubled, CEO and co-founder Eric Setton said. Hundreds of millions of songs have been shared between members since Tango introduced music through integration with Spotify in October 2013. In addition, the ability for users to play games online together with friends on Tango has driven an increasing amount of game downloads and activity, Setton said.

Tango will use this funding to "enable us to continue to innovate, hire the best talent, aggressively expand our content partnerships, and build a world-class platform as we go after what is truly a big opportunity," Setton said.

Tango previously raised $87 million from Access Industries, DFJ, Qualcomm Ventures, Toms Capital and Translink Capital, as well as Bill Tai, Shimon Weintraub, Jerry Yang, Alex Zubillaga and others.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...