Chinese gaming/communication combo YY.Inc just filed with SEC for an IPO to offer up to $100 million ADS to investors. Founded in 2005 by Li Xuelin, former editor-at-large of Chinese portal site NetEase, the startup received US$ 1 million angel investment from Lei Jun, one of the best-known angel investor in China’s Internet world, and raised another US$ 4 million in Series A (Morningside Ventures,
2007) and US$ 5 million in Series B round (Steamboat, 2008). GGV and Tiger Fund also invested US$ 23 million and 100 million respectively.

The Nasdaq candidate described itself as a “revolutionary rich communication social platform that engages users in real-time online group activities through voice, text and video.” YY Music, one of its offerings on the communication platform, contributed US$ 14.95 million, or 31% of its total revenue in 2012H1, surpassing US$7.9 million online advertising business, only next to US$ 23.6 million online gaming business. Monthly active users of over 26.57 million in September, 350 thousand are paid users. ARPU for the service is RMB 254 yuan, even better than some online game companies. For example, ARPU for Perfect World used to be around RMB 200.

For western investors who never heard of YY client or YY Music before, you’re not alone, for YY targets Chinese blue collars in tier 3, tier 4 or even townships where entertainment is scare and life is tiresome. YY becomes a popular platform for live music performance for grassroots musicians. People can have their own concert, while listeners can buy and give virtual items to performers they love – the secret recipe of how YY Music makes money.

Catching consumer needs is the first step, but far from enough, what’s behind YY’s thriving scene, is a robust infrastructure that supports more than 100,000 concurrent users with more than 10 million concurrent users online at its peak, doing audio chatting.

The IPO of YY Inc. could be a latest sign to prove that, no matter how bad the market condition across the pacific is, and whether your startup has a U.S-inspired story to appeal investors, truly creative startups meeting needs from the crowd are always being favored by
investors.