Kik is also using the acquisition of Rounds, which allows up to 12 people to video chat on mobile at once, to open an R&D center in Israel
Before there were those silly filters on Snapchat, there was another startup with doodles and fun, live video graphics. Tel Aviv-based Rounds was one of the first group video chatting applications for mobile, and now, it has reaped the rewards of being an initial innovator in this field. Kik, a larger Canadian chatting company, announced on Thursday that it acquired Rounds for an undisclosed sum.
While neither Rounds nor Kik disclosed a price for the acquisition to Geektime, other news outlets estimate that it is somewhere between $60-$80 million. Given how much funding Rounds had previously raised, about $24 million since Dany Fishel and Ilan Leibovich launched the startup in 2007, this appears to be a moderately priced buyout. Comparing it to other Israeli startups that have been purchased for a similar amount of money in recent years, this isn’t as successful as PayPal’s buyout of CyActive, which had only raised $2 million and been in existence for two years, nor is it quite as disappointing as Prosper’s purchase of BillGuard for $50 million, considering that BillGuard was in a more lucrative sector. Even though Rounds’ technology was forward looking and it reportedly has 40 million users, realistically it is lucky that it was able to be acquired given the fast pace and enormous user base of other video conferencing applications, including Facebook Messenger.
In addition to the acquisition, Kik — which has raised about $120 million to date, including a $50 million round led by Tencent valuing the company at $1 billion in 2015 — is also opening an R&D center in Israel, its first outside of Canada. Rounds’ 35 employees will now be part of Kik’s Israeli R&D center.
In an interview with Geektime, Rounds CEO and co-founder Dany Fishel told us that they had already been collaborating with Kik on their group video chat feature and the opening of their Israeli office for a number of weeks. When we asked him why they decided to sell, he said, “At a certain point, we had to decide if we were going to continue on the path we were going or join the big ones, to fight the giants. It is rare to have two companies that have such a similar corporate culture and shared vision. We are excited to build the next big thing together.”
Kik CEO Ted Livingston said in a statement, “The team at Rounds knows how to build products that make chat fun and entertaining for our teen audience. The company has very strong product and engineering experience, and we’re excited to join forces to achieve our goal of making chat the central hub for everyday life.”
In addition to innovative graphics, Rounds enables groups of up to 12 people to play games, watch videos, and read stories, among other activities. It is particularly popular among American teenagers.