What’s behind Musical.ly’s $500M valuation

By Abhinav Agrawal

Last week TechCrunch reported that Musical.ly, a musical social network app, was in the process of raising a $100M round at a $500M+ valuation. Given the company’s headquarters in Shanghai and its mostly Asian or Asia-focused investors, the raise took many in Silicon Valley by surprise.

While the app didn’t receive lavish media attention, you could foresee its rise if you know where to look. SurveyMonkey Intelligence, which provides detailed metrics on thousands of mobile apps, shows that Musical.ly’s valuation is based on extremely solid metrics.

Musical.ly is one of the largest apps in the United States!

To begin with, Musical.ly is one of the 30 largest apps by monthly-active users in the United States! The app has been growing consistently for the last few months and has over 20 million monthly active users on smartphones in the United States. The app is significantly larger than Vine (acquired by Twitter), Flipagram, Dubsmash, and Triller.

Musical.ly also has a significant lead in terms of downloads per day compared to other players in the category.

Wildly popular among young women

One of the reasons, why the app was relatively unknown in Silicon Valley is that its largest constituency is young women. The app is almost 75% female and 60% under age 30 — not the typical VC profile. With a youthful user base, it’s clear why the app is often compared to Snapchat, and possibly a driver for the rich valuation.

Solid engagement, retention, and time per day metrics

The app has extremely solid operational metrics. It beats out its competitors on time spent per day, engagement, and even weekly churn. Given these metrics and daily downloads, Musical.ly is set to keep growing.

Next innovation could come from anywhere!

Musical.ly is another example that the global nature of themobile app ecosystem enables companies based anywhere to succeed in the United States market. Kik (Canada), King (Sweden), Letgo (Spain), Spotify (Sweden), Supercell (Finland), Wallapop (Spain), and Waze (Israel) are all examples of companies that have done extremely well in the United States app store despite being based abroad.

Silicon Valley no longer has a monopoly on mobile innovation. To find the best investment opportunities, investors should pay more attention to companies and teams based internationally.

This post originally appeared on May 16, 2016 on the blog of SurveyMonkey Intelligence, a competitive intelligence product for mobile apps.

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