Chinese Internet giant Tencent took a $50-million (45-million-euro) stake in smartphone messaging application Kik, the Canadian company said Tuesday. The large-scale funding propelled the Ontario-based firm into the unicorn club of startups with valuations over $1 billion.

Using the fresh shot in the arm, Kik said it was planning to expand its chat-based services predominantly for its base of American youth.

The company noted some 70 percent of its 240 million registered users were between 13 and 24 years old, adding that 40 percent of US teens used Kik actively.

"Young Americans are a large group with unmet needs," Kik CEO Ted Livingston said in a statement. "We can't think of a better group to be building for."

Competitors galore

Kik said it felt good to receive support from Tencent, China's biggest social network and online entertainment company that also runs WeChat messaging service.

"It was clear they understood chat deeply, making them a great sounding board," Livingston said. Kik is hoping to draw from Tencent's experience in turning its messaging app into a platform to also do online shopping, order taxis or play games.

Kik faces fierce competition in the mobile chat segment, with Snapchat targeting the same teenage audience and Facebook Messenger plus WhatsApp claiming far more users at present. However, the Canada-based firm is betting on a growing number of add-on services to broaden its own user base.

hg/sri (AFP, Reuters)