Kik buys video chat app maker Rounds for a reported $60-$80M, will acquire all 35 staff, and turn its Tel Aviv office into a product and engineering center
Messaging company Kik has made its second major acquisition after it scooped up Israel-based mobile video app maker Rounds in an undisclosed deal.
Context & Ripple Effects
This is Kik's second acquisition in just over a year, following its December 2015 purchase of Blynk, the fashion startup behind a popular Kik bot — a pattern of buying capabilities rather than building them. The target is a natural fit: Rounds had raised a $12M round led by Sequoia for group video chat supporting up to 12 users alongside gameplay and co-watching, while Kik only shipped its own six-person video calling a month before this deal.
The price tag is plausible against Kik's balance sheet: the company took a $50M investment from Tencent at a $1B valuation in 2015 after earlier exploring a sale or corporate investment. The deal also converts Rounds' Tel Aviv office into a product and engineering center, giving Kik a permanent R&D footprint in Israel.
First-order effects
- All 35 Rounds employees join Kik, and their Tel Aviv office becomes a product and engineering center — an acqui-hire-plus-asset structure rather than a standalone app acquisition.
- Rounds' investors, including Sequoia from the 2015 round, exit on a reported $60-$80M sale roughly two years after raising.
Second-order effects
- Kik can push group video past its own six-person ceiling using technology already proven at 12 users with gameplay and shared viewing, closing a feature gap against larger messaging rivals without waiting on internal development.
- With Tencent's capital behind it, Kik signals to other startups in its orbit that platform-building via acquisition is open for business, following the Blynk playbook.
Third-order effects
- The deal foreshadows how Kik's strategy evolved: the messenger it was augmenting here was itself sold to MediaLab in 2019 so Kik Interactive could focus on Kin cryptocurrency — meaning capabilities acquired to deepen the messenger ultimately outlived the parent's commitment to it.
- For Israel's startup ecosystem, the transaction adds another example of foreign messaging platforms converting local video-tech teams into permanent engineering centers rather than shutting them down post-acquisition.
The trend: Messaging platforms are acquiring video-chat teams outright to add real-time social features faster than they can build them internally.