Snapchat Gets US$537 Million In Fresh Funding

31 May 2015 | Author: | No comments yet »

Snapchat Raises $537.6 Million In New Funding As App Makes Media Push.

The vanishing-message service did not disclose who bought stakes in the Los Angeles-based company, which came at a price estimated to give Snapchat a value of more than $15 billion, according to media reports. “We need to IPO, we have a plan to do that,” chief executive officer Evan Spiegel said on-stage at a Code Conference in California when asked about the potential for an initial public offering of stock. SAN FRANCISCO, United States – Snapchat on Friday informed US regulators that it has raised $537 million in a new round of equity funding that could climb as high as $650 million.LOS ANGELES — Snapchat Inc. is ready to start collecting serious revenue from advertisers, but that doesn’t mean it’s done raising money from investors.

The demand to own private shares in Snapchat Inc. has become so fierce that its newest investors are willing to receive second-rate stock in exchange for their money. Spiegel acknowledged plans for a Snapchat IPO during a talk in which he agreed with the notion there is a tech industry bubble that will at some point burst, with low interest rates, easy money, and risky investments calling for a “correction.” Smartphone app Snapchat late last year began letting users in the United States send money to friends by simply typing dollar amounts into new “Snapcash” messages. That’s despite the fact that investors were forced to take common stock, rather than preferred shares or other instruments that typically offer more protections to early-stage investors. The startup has raised $538 million from a collection of 35 investors since mid-February and could get $112 million more, according to a filing with the Securities and Exchange Commission on Friday.

The new service was added as Snapchat worked to boost the money-making capabilities of its popular app, which sees messages disappear shortly after being viewed. The unusual move by 24-year-old CEO Evan Spiegel hasn’t hurt Snapchat’s valuation, which has added $1 billion since a $200 million fundraising earlier this year that attracted investors including Alibaba. The financing values Snapchat at $16 billion, said a person familiar with the matter, a 60% bump from its previous round in December when the company began stepping up plans to make money. The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New investors in Snapchat, whose disappearing photo-sharing service is popular with the teen set, include Fidelity Investments, York Capital and Glade Brook Capital, according to CNBC. As standard practice, venture-capital investors typically receive preferred shares when they invest, meaning they receive certain rights over common stockholders. Spiegel also said this week that the app is approaching 100 million daily active users in developed markets and that about 65% of those users create content on the app daily. Snapchat’s ability to sell common stock at such a large valuation underscores investors’ strong desire for a piece of the fast-growing mobile-messaging service. Discover features a range of media brands such as ESPN , National Geographic, Yahoo and People, delivering a new set of articles and videos to users each day.

Snapchat’s jobs page currently lists a handful of openings for both its Discover and content teams and plans to offer coverage of the 2016 U.S. presidential election. Vertically oriented trailers, about 10 seconds long, for the movie appeared in the National Geographic channel on Snapchat and the short cosmetics ads came inside the Cosmopolitan magazine channel. Other investors include Yahoo, Kleiner Perkins Caufield & Byers, Benchmark, General Catalyst Partners, Institutional Venture Partners, Lightspeed Venture Partners, Coatue Management and DST Global. When asked at the Code Conference this week about the current climate around tech investing, the 24-year-old CEO and co-founder said he predicts a “correction” is coming and he has factored that into his plans. The company runs one of the most popular messaging services in the U.S., especially among teenagers, in part because of the ephemeral nature of its messages.

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