Tango, a messaging service, debuted four years ago as a Mountain View, California start-up. Since then, it has acquired 200 million users for its software communications package. Tango is available across a variety of platforms from PCs, Macs, and smartphones, but the app is optimized for use on mobile devices. The $215 million investment from Alibaba on the Tango App is just the most recent investment in a line of multiple companies who have recently seen fit to invest in mobile messaging services. It appears that the trend is continuing and that mobile messaging services have now turned into hot commodities.
Mobile messaging services typically allow users to communicate through voice or video and allow users to share content such as music and photos. Tango is no different. According to the website, one of Tango’s core values is diversity. The company continues to seek new and innovative ways to allow consumers to interact in ways that are not only fun but easy and spontaneous as well. Currently, the company is headquartered in the Silicon Valley but has offices located in both Beijing and Austin.
Alibaba’s $215 investment in Tango is not an outright purchase. The money that Alibaba now invests provides the company with a minority stake on the Tango messaging app. The $215 million is part of an overall $280 million investment led by Alibaba but which also has other investors. According to regulatory filing sources, this investment will now value Tango at approximately $1.1 billion and will provide Alibaba with an estimated 20-25 percent. While these figures have been estimated and checked against sources close to the deal and the company, Tango itself has not commented on either the value of the company or the percentage of Alibaba’s stake.
Alibaba’s executive vice chairman Joe Tsai has indicated that they are impressed with Tango’s quality and vision. He furthermore states that they believe the team at Tango has interesting ways of looking at the mobile and messaging opportunities available. Alibaba is a Chinese e-commerce site with its own valuation reaching as high as $250 billion.
This investment from Alibaba comes soon after the Japanese e-commerce giant spent $900 million to buy Tango’s rival Viber and Facebook spent $19 billion in both stock and cash on WhatsApp. These deals indicate that investors believe in the ability of mobile messaging applications to be money-making possibilities.
Tango, WhatsApp, Viber, and others allow consumers to send both free texts over data connections as well as make free calls. Traditional carriers normally charge fees for people to do the same things. The possibility of these free apps becoming a threat to traditional carriers could become a future consideration.
Tango began as a video calling app hoping to pull their share of the market from both Skype and FaceTime but the service has branched out to become more of a mobile social network built around communications. Last October Tango partnered with Spotify to allow its users to share music clips and has also distributed 30 games in the last eight months.
Alibaba and Tango have been in communications since last year, prior to the Viber and WhatsApp deals. Several weeks ago Tango’s founders went to China to meet with Alibaba’s founder, Jack Ma. Records indicate that the deal was assisted by Jerry Yang, Yahoo’s co-founder and an early investor in Tango. In fact, Yahoo owns 24% of Alibaba. The possibility exists that mobile messaging may provide new ways for merchants to sell their items through Alibaba although it appears that this investment does not include any business rights for the Tango app.
By Dee Mueller