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Viral Video App TikTok Is Here to Stay

January 7, 2020, 2:11 PM UTC

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Like it or not, TikTok is not going away.

The viral video app is killing it with teenagers, growing at a faster rate than Facebook, Instagram, and Snapchat.  

TikTok is owned by Chinese parent company ByteDance, and is designed for the “new generation of creators.” The Chinese version of TikTok, called Douyin, has amassed 400 million daily active users, ByteDance revealed in its annual report this week. 

Katherine Wu, an investor at Notation Capital, wrote a blog post about ByteDance’s report, asking the question that’s definitely been on my mind: “Is ByteDance the first company to have created a truly global, viral, social app?”

Wu thinks this is only the beginning for ByteDance and its dominance beyond China.

At 28, I feel ridiculously old for TikTok, and I have no idea how to use it, so I just do what other “old people” do — I follow TikTok’s account on Instagram. So when I went to Atlanta over the holidays to spend time with family, my younger sister decided to give me the low-down on TikTok. (She falls squarely in the Gen Z demographic — she’s not on Facebook, barely uses Instagram, but is absolutely obsessed with TikTok.)

She scrolled through the various short-form videos and even forced me to record one with her. (We danced to a mashup of Mariah Carey’s “All I Want for Christmas Is You” and … “Soulja Boy.” Don’t ask. I don’t know either, and I am certain this video will somehow come back to bite me in 20 years.) 

All of ByteDance’s products use machine learning in some way to deliver hyper-personalized content that users want. The company uses computer vision and natural language processing to understand and analyze written content, images and videos. Based on your clicks and swipes and taps, the algorithms learn your reading habits and bring you content that it knows you’ll like.

So even though the videos I saw were funny, and I enjoyed them, I couldn’t stop thinking, “YOUR DATA. WHAT ABOUT CHINA. OMG.” And I’m not the only one with those worries. The U.S. government and other tech industry observers have similar concerns.

They fear that TikTok is collecting and sharing user data. It’s threatening national security. It could challenge democratic values. Worst of all — it’s promoting “scantily clad adults and suggestive dancing” to children.

But my little sister didn’t know about any of that, and like many in her age group, didn’t exactly care. “They’re just funny videos.” And honestly, it might be a little too late to stop its influence because it’s already so ingrained in culture. 

If you don’t believe me, just read this mind-boggling article in the New York Times about how TikTok influencers with millions of followers are moving into a house in Los Angeles together to … make content full-time. Dubbed the “Hype House,” the physical location of this content creator collective is nearly without furniture, which makes shooting videos easier.

Several politicians have asked the U.S. government to open an investigation into TikTok out of concerns about censorship and counterintelligence. But the genie is way out of the bottle, and culture doesn’t follow Washington’s timeline. 

HOW CONFIDENT ARE YOU?: Term Sheet has teamed up with Semaphore on its 12th annual confidence survey of private equity and venture capital professionals. In the past, hundreds of you have chimed in with your confidence levels for the year ahead. I encourage you all to take the survey here. The results will be published here early next month. Thanks in advance.

Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com 

VENTURE DEALS

- BigID, a New York-based developer of security software products for personal data protection and privacy, company raised $50 million in Series C funding, from Tiger Global.

- Orchard (previously known as Perch), a New York-based home buying marketplace, raised $36 million in funding. Navitas led the round, and was joined by investors including FirstMark, Juxtapose, and Accomplice.

- Ride Health, a New York-based provider and coordinator of transportation for patients, raised $6.2 million in seed funding. Activate Venture Partners led the round, and was joined by investors including Newark Venture Partners, Anthro Ventures, BioAdvance, Leading Edge Ventures and Startup Health.  

- Juro, a London-based contract management platform, raised $5 million in Series A funding. Union Square Ventures led the round, and was joined by investors including Point Nine Capital,  Taavet Hinrikus, and Paul Forster

- Ripple Science, an Ann Arbor, Mich.-based developer of web-based software for health sciences, raised $2.5 million in funding. Investors include Dundee VC, Mercury Fund, SpringTime Ventures, Red Cedar Ventures, and M25, Revolution’s Rise to the Rest Seed Fund

- OncoLens, an Atlanta-based developer of cancer treatment planning software solutions, raised $2.5 million in pre-Series A funding. BIP Capital led the round, and was joined by investors including Atlanta Technology Angels, and the Robbins Fund. 

- TeleVet, an online platform that connects veterinary clinics to their existing clients, raised $2 million in seed funding. Dundee Venture Capital and Mercury Fund co-led the round, and were joined by investors including GAN Ventures.

HEALTH & LIFE SCIENCES DEALS

- Debut Biotechnology, a San Diego-based startup that creates advanced manufacturing processes for high value molecules, raised $2.6 million in seed funding. KdT Ventures led the round, and was joined by investors including Better Ventures, FTW Ventures, and SpringTide Ventures.

PRIVATE EQUITY DEALS

- Insight Partners will acquire Armis, a Palo Alto, Calif.-based company focused on enterprise IoT security. Under the terms of the agreement, Insight will acquire the company for cash at a valuation of $1.1 billion, with participation from CapitalG for $100 million and rollover from certain existing stockholders.

- Colony Capital invested $185 million in DataBank, a Dallas, Texas-based provider of enterprise-class data center, connectivity and managed services.

- Care Advantage, a BelHealth Investment Partners portfolio company, acquired Amaisa Home Care, a Leesburg, Va.-based provider of non-medical home care services. 

- Trinity Hunt Partners acquired a majority stake in Dataprise, a Rockville, Md.-based IT managed services provider. Financial terms weren't disclosed. 

- Surge Private Equity acquired Norris Training Systems, a Texas-based provider of training hosting services. Financial terms weren't disclosed. 

- Busy Bee Cleaning Services, which is backed by Surge Private Equity, acquired Reyes Cleaning Services Corp, a New York City-based cleaning service company. Financial terms weren't disclosed. 

- Cotton Creek Capital acquired Landpoint, a Bossier City, La.-based provider of geospatial services. Financial terms weren't disclosed. 

- Sun Capital Partners, Inc. acquired Cotton Holdings,  a Katy, Texas-based infrastructure support services company for public and private entities.  Financial terms weren't disclosed. 

- Sheridan Capital Partners made an investment in Tarrytown Expocare, an Austin, Texas-based long-term care pharmacy. Financial terms weren't disclosed. 

IPOs

- Topgolf International, a driving range operator, is preparing for an IPO that could value the firm at about $4 billion, Bloomberg reports, citing sources. Read more.

- Velocity Financial, a Westlake, Calif.-based mortgage lender, plans to raise $109 million in an IPO of 7.25 million shares priced between $14 to $16 apiece. The firm posted net interest income of $124.7 million and net income of $10.6 million in 2018. Snow Phipps and PIMCO back the firm. It plans to list on the NYSE as “VEL.” Read more.

- Arcutis Biotherapeutics, a Westlake Village, Calif.-based biotech focused on skin diseases, filed for an $100 million IPO. The firm posted losses of $19.3 million in 2018. Bain Capital (13.5%), Frazier Life Sciences (36.9%), and OrbiMed (15.1%) back the firm. It plans to list on the Nasdaq as “ARQT.” Read more.

- Professional Holding Corp., a Coral Gables, Fla.-based bank, filed to raise $75 million in an IPO. The firm posted total interest income of $28.2 million and net income of $6.8 million in 2018. BayBoston Capital, EJF Capital, and Emerald Advisers back the firm. It plans to list on the Nasdaq as “PFHD.” Read more.

EXITS

Warburg Pincus agreed to acquire Sundyne, an Arvada, Colo.-based company that manufactures mission critical flow control equipment. Sellers include BC Partners Advisors L.P. and The Carlyle Group. Financial terms weren't disclosed. 

PEOPLE

- Vineeta Agarwala joined Andreessen Horowitz as a general partner on the bio fund.

- Ara Partners Group promoted Johanna Schmidtke to managing director. 

- Silversmith Capital Partners promoted Marc Munfa to operating partner, Nikhil Marathe to principal, - and Lyndsay Kerwin and Jay Leventhal to vice president. 

- OpenGate Capital promoted Aaron Figura to principal.

- Surge Private Equity named Thiago Farias as vice president.

- Ara Partners Group promoted Johanna Schmidtke to managing director. 

-  LLR Partners promoted Sasank Aleti and Michael Levenberg to partner.

-  Silversmith Capital Partners promoted Marc Munfa to operating partner, Nikhil Marathe to principal, and Lyndsay Kerwin and Jay Leventhal to vice president.

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