Snapchat’s Massive Valuation of $10 Billion is no Big Deal for Investors

Snapchat's 24 year-old co-founder and CEO Evan Spiegel

Snapchat’s 24 year-old co-founder and CEO Evan Spiegel

Several news outlets today broke the news that Snapchat which has no potent revenue source is raising funds from investors based on a valuation of $10 billion.

The Wall Street Journal’s Evelyn Rusli and Douglas Macmillan citing anonymous sources familiar with the matter reported that Kleiner Perkins Caufield & Byers, one of the best-known VC firms in Silicon Valley, has agreed to invest in the Snapchat Inc. “at a valuation close to $10 billion”. CNBC, Bloomberg News and TechCrunch also reported citing unnamed sources that the ephemeral photo messaging Service Company has been in talks with investors for past few months based on a $10 billion valuation.

If reports are true, then it could entail that Snapchat will soon be amongst the world’s highest valued private tech startups in spite of its lack of straightforwardly identifiable paths to revenue.

According to unnamed sources, Kleiner has committed to invest a sizable amount of up to $20 million; a deal that could roughly give the VC firm a stake of 1% in the company. The Wall Street Journal remarked that “at least one strategic investor has also committed to invest in the round, which isn’t yet closed”.

Earlier this year, Russian investment firm, DST Global also invested in Snapchat based on a valuation of $7 billion.

Why is Snapchat valued so high?

Snapchat, which features no ads, is slowly turning into a ubiquitous messaging service app and is currently the third most popular app amongst Gen Y. Sources familiar with Snapchat’s internal numbers revealed that it has more than 100 million MAUs (monthly active users), a number more striking  to potential investors.

Earlier in 2013, venture capitalists valued Snapchat at more than $800 million and last at the end of the year at $2 billion. Advertisers see enormous potential in the three year old app due to its widespread growth and usage amongst millions of young demographic. Last November, Snapchat turned down a $3 billion acquisition offer from Facebook.

Snapchat is not only the fastest growing mobile app but also one of the fasting growing tech startups in terms of its valuation.

The recently raised capital could help Snapchat outline prospective and successful revenue path. As a matter of fact, Evan Spiegel, co-founder and CEO of Snapchat has already charmed investors by sharing the company’s revenue plans in recent months, said a person familiar with the matter.

To date, Snapchat has generated more than $160 million in funding from several financial institutions including Benchmark, Institutional Venture Partners, Lightspeed Venture Partners, Coatue Management and Chinese e-commerce company Tencent Holdings Ltd.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Why Is Squid Game So Popular?

Why Is Squid Game So Popular?

The Squid Game segments were watched by at least 132 million people in the first 23 days of the show on Netflix. Know what excited the viewers.
18 hours ago
Amazon under Congressional scrutiny for pushing own products over others

Amazon under Congressional scrutiny for pushing own products over others

US judiciary Antitrust Committee writes a letter saying that Amazon is given time till November 1 to prove that it utilizes seller data available to create competing products and p
2 days ago
Porsche’s Taycan EV outsells ICE powered its 911 sports car

Porsche’s Taycan EV outsells ICE powered its 911 sports car

The Porsche Taycan EV has outsold the Porsche 911 sports car for the first time since it was introduced in 2019 by the German automaker.
3 days ago
Tesla expected to make a killing in Bitcoin profits in next earning report

Tesla expected to make a killing in Bitcoin profits in next earning report

The price of Bitcoins has rallied to another high in October after hitting around $64,800 in April. This time it has hit over $58,000 on Oct. 14.
4 days ago
Tesla Cybertruck V/s Rivian’s R1T

Tesla Cybertruck V/s Rivian’s R1T

The Tesla Cyberturck left many disappointed with its alien space ship-like design; though both trucks are still under production, what matters most is what comes under the hood.
5 days ago
College sports is multibillion dollar industry in the US

College sports is multibillion dollar industry in the US

According to data analyzed by GOBankingRates, head football coaches, closely followed by basketball coaches, easily rack up seven-figure salaries in the US.
6 days ago