Alibaba Invests $200 million in Snapchat, Making Its Valuation $15 Billion
Alibaba Group Holding Ltd. has made a huge investment of $200 million in the 3-year old startup Snapchat Inc., making its worth $15 billion, people with insight into the investment have confirmed to CNET.
Snapchat is well known for its ephemeral messaging service. This very feature, which vanishes the messages and pictures after 10 seconds, has expanded its audience and has enhanced investors interest in putting their capital in the company.
Since 2013, Snapchat has raised money through five investment rounds. Two of the investment occasions took place just in last six months. One interesting occasion which will be remembered long in the business history of Snapchat also took place in 2013 when the startup declined acquisition offer of $3 billion from Facebook.
In 2014, venture-capital investment firm Kleiner Perkins Caufield & Byers invested $20 million in the company which surged its value to $10 billion.
Undoubtedly Snapchat’s fame motivated Alibaba for the recent investment. By the virtue of this prodigious funding from the Chinese e-commerce giant, Snapchat has listed its name as one of the leading three venture capitalist-funded startups; Chinese smartphone maker Xiaomi and car ride-sharing service provider Uber Corp., are the only two above Snapchat in valuation. Xiaomi possesses market worth of about $45 billion while Uber has the valuation of $40 billion.
In a very short span of time, Snapchat’s popularity and value have seen a rapid growth. As said above, the chief reason behind its popularity is ephemeral sensation of communication, which it provides. The company claims that about 700 million snaps are shared through its platform. The app is especially popular among the teenagers who love to share each moment of their day with their beloved ones.
Last year, Snapchat was ranked among three most popular social media apps securing third position in this list, reported an industry researcher, ComScore.
Snapchat has not just worked as a message service but, unlike the conventional fashion of social media sites, it has ventured in video and chat services too. Part of this expansion was Discover, a content sharing service, which it recently launched after teaming up with CNN, The Food Network, Vice and others.
This investment carries a lot of significance for Alibaba’s portfolio too. The business has branched out in China but hasn’t made any notable deal in the U.S before investing $200 million in Snapchat.