SMS is slowly dying as people embrace instant messaging apps as a form of communication. They’re growing in popularity every day, and because of this smart investors are backing these services big time.
TangoMe, the mobile messaging service, has just received a massive $280 million Series D round of funding led by Alibaba Group Holding Ltd., with the participation of existing investors. Alibaba confirms it contributed $215 million to the round. The startup has raised a total of $367 million in venture funding from the likes of DFJ, Qualcomm Ventures and former Yahoo CEO Jerry Yang.
Michael Zeisser from Alibaba will join Tango’s Board of Directors. The round of funding will be used to double its workforce to more than 300 this year, and open up its service to more outside developers.
“The way we see it, this is just the beginning for Tango. We believe that messaging apps will fundamentally change the way content and services are distributed. We are very excited to continue to build upon our foundation of free communications, while extending into new growth areas in social networking and content. We know that we can’t do it on our own, and for that reason, we couldn’t be more excited to announce our newest investor, Alibaba Group,” Uri Raz, Founder and CEO, and Eric Setton, Founder and CTO, posted on Tango’s blog.
Unlike other mobile messaging services like WhatsApp and Viber, Tango is considered as a bit of an underdog since its user base isn’t nearly as large as these. But even so, it’s likely that Tango will now be able to compete and bring more people to use its service if it uses Alibaba’s cash injection wisely.
Tango also has something of an edge over other messaging services as it offers more than just messaging and voice services. Tango also serves as a social media platform, allowing users to discover people around them and chat with them. Users can also play games with their friends, share photos and even music. Tango believes that providing more features will entice more users to sign up for it, and it believes it can even be bigger than WhatsApp one day.
Tango isn’t the only one to be attracting big money though. As we all know, WhatsApp was recently acquired by Facebook for a whopping $19 billion in cash and stocks, while the second-biggest messaging service by number of registered users, Viber, was acquired by Rakuten for $900 million earlier this year.
The sudden interest in investing in or acquiring mobile messaging services stems from the fact that this is where consumers are most active. Ads can easily be placed in these services to reach more people and increase revenues. And if people hate the ads, it’s always possible to ask for a subscription fee to go ad-free. Emojis and emoticons are now being replaced by stickers that are more vibrant, playful and interesting, and consumers don’t mind paying $1 to get a full set of stickers.
Though other messaging service are more popular than Tango, the startup is banking on word of mouth to boost its popularity.