Snapchat valued at more than $15bn in latest fundraising

30 May 2015 | Author: | No comments yet »

Snapchat Raises Another $500 Million From Investors.

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.

The mobile messaging start-up said in a regulatory filing that is has raised $538 million in new funding; according to Bloomberg the new investors include Chinese e-commerce giant Alibaba and venture capital firms York and Glade Brook. 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. 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.

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 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.

As standard practice, venture-capital investors typically receive preferred shares when they invest, meaning they receive certain rights over common stockholders. Snapchat, started more than three years ago at a Stanford University fraternity, has been refining its pitch to advertisers and taking on media partners to build a television-like set of channels on the mobile application, which lets users send text messages that disappear quickly. 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. 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. 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. The company has joined with media brands including ESPN and Yahoo on its Discover service, which shows news articles and videos that disappear after one day.

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