Wattpad is looking to raise $50 million CAD from Tencent, according to a report from The Globe and Mail.
Tencent will reportedly be part of a $62 million CAD total VC deal — including Canadian and American VC funds — that values the company at $500 million CAD including the new funding. The round is expected to close in the next few weeks.
The company declined to comment to the Globe. However, it sent a statement that its focus on machine learning has allowed it to make “significant strides towards discovering more great stories on Wattpad and helping them find a home on various platforms.”
Sources close to Wattpad told the Globe that the company is generating revenue at an annualized rate of $24 million CAD per year, and growing by about 100 percent.
In May, the company laid off 10 percent of its staff specifically to invest in its machine learning tech.
“Machine learning will help us become more efficient (i.e. community moderation), as well as seize even more opportunities to spot hits-in-the-making and co-produce stories with our partners in the traditional entertainment industry for other formats,” Lau said at the time.
The company also announced the launch of a subscription service to boost its revenue. The subscriber-paid version will cost $5.99 per month — or $60 per year — for an ad-free version. Having an ad-free option was one of the most requested improvements suggested by Wattpad customers, according to Lau.
Sixty million readers are using Wattpad, which has 2.5 million active writers each month.
“In the next 10 years, one of the major objectives of the master plan is to monetize and distribute the contents on and off platform. Wattpad Premium is one of the many ways we can increase monetization,” Lau told the Canadian Press. “The company from a financial perspective is already in a very healthy state but there’s no such thing called ‘too healthy.”
