Social Media Darling Snapchat to be Valued at up to US$ $19 Billion in Funding Round
What: Snapchat Inc. is seeking a new round of funding that would value the company as high as US $19 billion.
Why it matters: This latest valuation, a huge increase for Snapchat, could make it the third-most valuable venture-backed company in the world. The high valuation also shows that Social Media platforms like Snapchat that are very popular among Milennials and Teens, are very coveted by investors who expect them to continue to grow at a very high rate.
Snapchat Inc. is in the midst of raising a new round of funding that would value the company between US$16 billion and US$19 billion, making it the third-most valuable venture-backed company in the world.
Photo sharing company Snapchat aims to raise as much as US $500 million in this new round. Those numbers would place Snapchat behind only mobile car-booking application Uber Technologies Inc. and Chinese smartphone maker Xiaomi Corp. in the top three startups backed by venture capital firms, according to researcher CB Insights. Xiaomi is valued at US $45 billion, while Uber’s latest round pegged its value at US $40 billion.
A valuation of US$ 19 billion would place Snapchat among the top three startups backed by venture capital firms.
As Julie Diaz-Asper writes in a recent Portada Sounding Off Column, Marketers should keep their eyes on messaging app Snapchat, which is extremely popular with the under 18 crowd, over 100 million monthly users and 71% under 25." I haven’t seen great numbers on Hispanic users but given the percentage of teens that are Hispanic it’s fair to assume that we’ll begin to see more adoption," Asper notes. "Snapchat’s, appeal to teens can be attributed to fast video and image sharing in a mostly a “parent free zone”, with the extra protection that messages disappear after being viewed", she adds.
Snapchat’s, appeal to teens can be attributed to fast video and image sharing in a mostly a “parent free zone”, with the extra protection that messages disappear after being viewed.
This latest valuation is a huge increase for the company, which Facebook offered to buy for US $3 billion in late 2013. Snapchat's previous funding round, completed late last year, valued the company at more than US $10 billion. The valuation of Snapchat is also close to the US$22 billion Facebook Inc. paid last year for WhatsApp Inc.
Since it was founded back in 20122, Snapchat’s valuation hasincreased considerablu. That increase goes hand in hand with a surge in venture spending to the highest level in more than a decade.Specially, as Snapchat continues to add to its active user base and extends its service. Last month it added videos (Discover, a kind of short-form television) and articles by mainstream media outlets such as CNN and ESPN, bringing Snapchat into closer competition with Facebook and Twitter.
Snapchat lets people take and draw on photos, then send them to select friends or add them to a public “story.” The photos and videos disappear seconds after the recipient views them. The company says its users -- the app is popular among teens -- send more than 700 million disappearing “snaps” and view more than 500 million stories daily.
Unlike competitors like Facebook or Twitter, the company does not use any demographic information to target information to individuals.
Snapchat raised US$485.6 million from 23 investors last year, including Yahoo! Inc. and venture capital firm Kleiner Perkins Caufield & Byers. Previous investors include Lightspeed Venture Partners, Benchmark and Institutional Venture Partners.