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After a strategic business analysis earlier this year, ByteDance has decided to dissolve all its investment arm operations.
In a major move, TikTok’s parent company ByteDance has decided to dissolve the operations on its investment department. The company spokesperson confirmed the same to CNBC on Wednesday, January 19.
The decision to overhaul the strategic investment team comes after the business analysis showed investments with “low synergies”. The spokesperson said that following an assessment earlier this year, ByteDance decided that it will “strengthen the focus of the business, reduce investments with low connection (to the main business) and disperse employees from the strategic investment department to various lines of business”. The move “strengthens the coordination between strategic research and the business,” noted the firm.
The Beijing-based company has been reducing the size of its investment team. This happens as Beijing reinforces its antimonopoly efforts cracking down on the big tech companies over the last year.
One of ByteDance’s latest high-profile investments includes a $4 billion acquisition of Shanghai-based gaming studio Moonton Technology last year.
ByteDance and Its Acquisition Spree
As per CB Insights, ByteDance is currently the world’s largest startup valued at $140 billion. The company is looking for ways to expand its footprint in the market. Drawing a leaf from what other tech giants are doing, ByteDance has adopted the route of investments and acquisitions.
Apart from Moontoon, ByteDance acquired a virtual reality startup, Pico, for an estimated $772 million. In the first quarter of 2021, Pico was identified as the third-largest virtual reality headset maker in the world. According to its financial reporting, the company reported shipment growth of approximately 44.7% year-on-year. Back then ByteDance said:
“We are optimistic about the future of VR and its alignment with our mission”.
ByteDance is yet not publicly listed and is planning for a Hong Kong listing in early 2022. ByteDance has been submitting all the filings with Chinese authorities right now and are going through the review process.
Another major development at ByteDance was its Founder Zhang Yiming stepping down as the Chairman. “I’m more interested in analyzing organizational and market principles and leveraging these theories to further reduce management work, rather than actually managing people. Similarly, I’m not very social, preferring solitary activities like being online, reading, listening to music, and daydreaming about what may be possible,” he said.