Venture Capitalist and Private Equity are getting into the mix along with other tech companies.

While it widely publisied that Microsoft is making a move to buy TikTok operations it is not the only suttor. Twitter has had preliminary talks. Also several investment firms with ties to Twitter or ByteDance also could play a role in any transaction involving Twitter or Microsoft.

One is large VC firm Sequoia Capital, which currently owns 10% of ByteDance (TikTok's owner). Doug Leone, Sequoia’s global managing partner been talking with his connection in the in the administration, including Treasury Secretary Steven Mnuchin and senior White House adviser Jared Kushner, that would allow TikTok to keep operating in the U.S. (Mr. Leone is one of few Silicon Valley leaders who openly back Donald Trump and has donated to his reelection campaign.) Other investors include private-equity firm General Atlantic and Japanese investment giant SoftBank Group.

One person involved in the deal said “everyone and their mother has been calling,” but that it isn’t clear which parties are serious and which are being taken seriously by ByteDance.

Sequoia’s lobbying effort with the administration kicked into high gear last month after Secretary of State Mike Pompeo said the U.S. might ban Chinese social media apps including TikTok, a comment that came a week after India banned TikTok and dozens of other Chinese apps.

Doug Leone, Sequoia’s global managing partner, told associates that he would reach out to Mnuchin and Kushner to see what it would take to save TikTok. General Atlantic Chief Executive William Ford has also lobbied for the company.

Bytedance is not keen on the idea of selling one of its most valuable assets under protest so it proposed spinning off TikTok and shifting votes to American investors. The White House said that ownership structure would have to change. Then the company and investors floated the possibility of including an American operational partner. The White House said that could work and Bytedance CEO Yiming Zhang reached out to Microsoft, a company where he worked briefly and whose culture he liked, to discuss a possible deal.

Microsoft has been negotiating for weeks and is thought to be the front-runner. On Aug. 2, Microsoft announced that it was pursuing a deal for TikTok’s operations in the U.S., Australia, Canada and New Zealand, and that it planned to conclude talks by Sept. 15. Microsoft has said that it might invite other U.S. investors to participate in a TikTok deal, but with $136 billion in cash and short-term investments analysts are confused why they would do that. (Microsoft declined to comment about that.)

With 100 million U.S. users, TikTok is very attractive to tach companies although it is not profitable yet. But even if they wanted to campanies like Apple Amazon, Google-parent Alphabet, and Facebook all are currently the subjects of antitrust investigations by U.S. regulators and Congress over their competitive practices. However, Twitter is much smaller and could fly under the radar of antitrust scrutiny which other potential bidders could not.

Still, Twitter is seen as a long-shot bidder because the company has far less financial firepower than other major tech players. Twitter started making a consistent profit in the past couple of years, but reported a $1.23 billion loss in the latest quarter. Twitter reported $7.8 billion in cash and short-term investments as of June. If Teitter teamed with one of its investors such as private-equity firm Silver Lake and potentially others than it would have the resources to make a competitive bid. , (In March Silver Lake invested $1 billion in Twitter)

Read more here


Economics, Finance and Investing