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Flipagram, the video creation app that was once considered a serious threat to Instagram, has been acquired by Toutiao, a Chinese news aggregator, according to Flipagram CEO Farhad Mohit.
Flipagram will retain its app and office and remain “completely independent,” Mohit said. Recode previously reported that the two sides were in serious acquisition talks.
Mohit did not share deal terms, but a source familiar with the talks told Recode back in December that Flipagram’s investors were simply hoping to get their money back. The company raised a large $70 million round in 2015 from well-known VC firms like Sequoia, Kleiner Perkins Caufield & Byers and Index Ventures.
It’s worth noting: Sequoia is an investor in both Flipagram and Toutiao, and Mohit says the VC firm was responsible for introducing the two companies last fall.
Flipagram, which lets users stitch together photos and videos into montages with background music, has been looking for an acquirer since the fall. The company started running into issues after it decided to build a social component into its app, akin to the friend network you might find on Facebook and Instagram.
Flipagram users were sharing their creations on those other networks, so Mohit wanted to create a similar social experience inside his own app to keep users from going elsewhere.
It was tougher than expected, and more costly. The company didn’t have the time or money to build that social graph on its own.
“In order to do a social graph, of course, you need people to make a lot of social connections on your platform, and many people had already made those connections on other platforms,” Mohit said in an interview with Recode. “So that was a challenge for us.”
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The hope moving forward, though, is that Toutiao can help Flipagram videos find the right audience even without a social component, Mohit says.
Toutiao, which means “Top Headlines” in English, is a personalized newsreader product that shows people stories that might interest them. Mohit says that as part of the acquisition, the companies plan to integrate Flipagram videos into the personalized content feeds.
And Flipagram hopes to put some of that personalization technology into its own app, with the ultimate goal of increasing their audience.
“[It’s] an incredible opportunity for our creators that we weren’t able to provide on our own, because we weren’t able to identify those audiences and we didn’t have the audiences,” Mohit said.
Toutiao has close to 70 million daily active users. Flipagram no longer shares its active user totals, but told Recode last March that it had 36 million active users. Mohit says its user base today creates 10 million videos per month.
Multiple former employees told Recode late last year that morale inside Flipagram deteriorated during the acquisition search process, and many employees had left or were looking for other jobs. Mohit says that the company has 42 full-time employees and he expects to retain everyone through the acquisition.
This article originally appeared on Recode.net.
