Chinese news aggregator Toutiao has acquired Los Angeles-based startup Flipagram after months of speculation.
Once touted as the "next Instagram" in a 2015 Forbes article, Flipagram is an app that lets users stitch videos or pictures together, add background music and turn them into a slideshow.
Despite its promise, the company failed to match what existing apps could already offer. Issues arose when Flipagram decided to create a social component similar to what Facebook and Instagram have.
"Flipagram users were sharing their creations on those other networks, so [Flipagram CEO Farhad Mohit] wanted to create a similar social experience inside his own app to keep users from going elsewhere," Recode wrote.
The company, however, admitted that incorporating such a feature would require time and money, and neither of which was at their disposal at the time.
"In order to do a social graph, of course, you need people to make a lot of social connections on your platform, and many people had already made those connections on other platforms," Mohit told Recode. "So that was a challenge for us."
The value of the acquisition remains undisclosed but Flipagram said it will operate as an independent subsidiary of Toutiao and keep all its employees.
Toutiao is a Buzzfeed-like, news aggregator website with about 70 million daily active users. The acquisition would allow Flipagram videos to be integrated into personalized feeds. The app also aims to upgrade its personalization features to get more users.
"[It's] an incredible opportunity for our creators that we weren't able to provide on our own, because we weren't able to identify those audiences and we didn't have the audiences," Mohit said.
According to the Los Angeles Times, it was Sequoia Capital that linked the two companies. Sequoia is an investor in Flipagram and Toutiao.
"It was a match made in heaven," Mohit said in a separate interview with the LA Times.