Sequoia Capital China and Perfect World, a Beijing-based culture and entertainment group, have led a new funding round in Zongheng Literature, a Chinese online reading platform backed by Baidu Inc.
No financial details were disclosed, but the round is reportedly worth RMB800 million (US$116 million), according to Chinese media reports. Chinese investors Shengjing Fund and Share Capital also participated.
Founded in 2008, Zongheng was later acquired by Baidu Inc. for RMB191.5 million, and was then merged with two online reading platforms Xiongmao Kanshu and Duoku Reading to form Baidu Literature in 2013.
In 2016, Perfect World repurchased Baidu Literature for RMB1 billion (US$140 million), with Baidu retaining a 20% stake and continuing to provide traffic to support the platform.
"Good content is always a rare resource in the market. We believe literature has great growth potential going forward," said Zheng Qingsheng, a partner at Sequoia. "Zongheng Literature has a great management team and a solid shareholder structure. Sequoia will support the development of this type of start-up, which has the potential to be a leader in a particular market."
The financing round came two months after Tencent Holding Ltd. revealed plans to spinoff China Reading Ltd., its online publishing and e-book unit. China Reading is reportedly eyeing an initial public offering in Hong Kong at a future date to raise US$800 million, according to media reports.
In 2016, China's digital reading market reached RMB12 billion (US$1.7 billion) with over 330 million readers. Over ten investment, merger and acquisition deals worth over RMB2 billion (US$290 million) took place in the digital content industry in China, according to a report released at the 2017 China Digital Reading Conference in April.