Google Confirms Stake in Xunlei

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Google confirmed its investment in Chinese P2P startup Xunlei according to various reports. We wrote about the investment in early December. The New York Times reports that Google invested $5 million for a 4% stake, which means Xunlei is valued at $125 million — we were pretty close when we put the pre-money valuation at $100 million. The NYT also says that Xunlei.com will use Google’s search capabilities.

China-based analysts at Pacific Epoch know more and say:

According to an unnamed insider, Xunlei recently received US$20 million in investment, in which Google invested US$5 million. Ceyuan Ventures, Morningside Ventures, IDGVC and Fidelity Asia Ventures invested the remaining US$15 million.

6 Comments

bizy

Google has no problems with piracy. Xunlei is a bigger enabler of piracy than even youtube. The US content rights holders should now add China to the areas from which they want a Google payment to allow Google to keep running their content on Youtube and now Xunlei.

I am guessing that Google made this deal for the following reasons:
A. Makes Google’s default search service within the xunlei application
B.Gives Google a scaled platform on which to start testing video Google ads in China
C. Starting to ramp up marketing spend to begin to battle Baidu. I think Google has been holding back on some marketing dollars until they felt their product and infrastructure was really in place in China. Now it is, so watch out Baidu. Google could spend on more on marketing in China than Baidu’s total revenue in a year (225-250M USD in 2007) with basically no impact to Google’s global bottom line.

One bit of complete speculation I heard from a friend in China’s Internet business. Why couldn’t they take the Xunlei technology and roll it out in the US, to compete with all the Bittorrent clients out there?

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