#006 - Toutiao (ByteDance) Series B Pitch Deck
Pitch deck for the deal of the decade
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Hey there,
If you have been tuning in to the Meituan Product Management series, great. We’re about 25% through the course. I thought it may be a good idea to take a little break from the course and share something else. There are tons of great Chinese content out there on topics other than product and about other companies as well. I can’t wait to get to them so stay tuned. 😉
This week, I’m sharing a pitch deck that I found - ByteDance when they were trying to raise their Series B in 2013. ByteDance is of course an innovative and product-driven company, so there are product lessons to be learned from their deck. Apart from that, there are also entrepreneurial lessons and venture investing lessons from their early stories. (Briefly covered in the background). Enjoy!
(P.S. If you want a PDF version of the complete deck, reply to this email)
Background:
ByteDance was incorporated on 12 March 2012.
Prior to that, during the Chinese New Year Period (29 Jan 2012 to be specific), Zhang Yiming had a coffee chat with an investor from SIG China, Wang Qiong. During the chat, Zhang Yiming famously drew up his original product concept for Toutiao (Below). SIG China then agreed to participate in both ByteDance’s Angel and Series A round.
Circled in red are what was drawn on the napkin (Photo: Wang Qiong/Huxiu) It wasn’t smooth sailing from here. In fact, Zhang Yiming recalled in an interview, “For the first year and a half, the whole industry didn’t believe Toutiao could make it.“
The reasons why most VCs passed Toutiao include:
Competition: the News & Media market has been dominated by web portals offered by tech giants such as Netease, Tencent, Soho, iFeng. Toutiao doesn’t even own the content.
Market: “Sina’s market cap at the time was just $3B, why would I invest at $50M valuation for a Mobile version of Sina?”, “Chinese consumers may not have such strong information needs.”
Founder: “Zhang Yiming is too polite. Internet founders in China need to be aggressive.”
Product & Commercial Value: People were impressed by the tech when they saw the demo. But how correlated are tech and success? Existing web portals were already fulfilling people’s information needs without this recommendation tech. How much user and commercial value can this tech really bring?
SIG China all but financed ByteDance the whole way through for their US$1M Series A in July 2012, and a following-on US$1M A+ Round in year-end 2012, as well as providing a US$1M bridge loan.
Around March 2013, the turning point came when Wang Qiong saw the news on Toutiao App that DST Global invested in Prismatic, a company that’s also working on personalized news in the U.S. She reached out to Yuri Milner of DST, betting that he would get what Toutiao is doing. Yuri quickly decided to invest and the Series B round finally came together. After the Series B, Toutiao became unstoppable.
For both SIG China and DST Global, ByteDance was an unusual deal. ByteDance is the first and only angel investment for SIG China. And for DST Global, if they invest in China, it’s usually the later stages (Series C in Xiaomi, Series C in JD.com, Series E in Alibaba).
The ByteDance deal was the investment of the decade in China, but it’s crazy how many top VCs passed the deal in the early stages (Neil Shen of Sequoia China, ZhenFund, Jixun Foo of GGV, Plum Ventures, GSR Ventures as well as tech giants like Tencent, Xiaomi, etc.). Some of them would get in in later rounds but the valuation would be much higher. ByteDance became the touchstone for whether you’re a good VC.
Toutiao (ByteDance) Series B Pitch Deck
Time: Sept 2013
Amount Raised: USD$10M ($50M Valuation)
DAUs: 3M+
See the whole deck: here
Source: the original owner is of course ByteDance.
Thanks for this post!
It is really inspiring how Toutiao started with a core of personalization ("understands you the best"), building an eng-driven company where the mission statement of company is so challenging that par for the course would require innovation at a world class level. A lot changed, how it looks, what it serves, how users interact. What stayed constant the singular purpose of understanding you the best. Building the world's most ML-first company. Unlike SV companies where they use ML for growth at later stages, Toutiao was ML-first.