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Venture capital firm Kleiner Perkins Caufield & Byer invested $20 million in Snapchat, making the social media company reaching a new status. Snapchat valuation reaches $10 billion and the company now enters a select club. Other recent startups valued at more than $10 billion are Uber and AirBnB. The high-tech market is blooming now, as two major acquisitions have been made this week by Google and Amazon.
Kleiner Perkins Caufield & Byers made a pledge in May to invest the money in Snapchat. Wall Street Journal reports that according to sources, there is at least another investor who will join the founding wave.
The Chinese ecommerce Alibaba Group Holding Ltd. wanted to invest in Snapchat as well, according to rumors from July, but the talks did not lead to a deal, Bloomberg notes.
“The valuation of our business and our capital requirements are the least exciting aspects of supporting the Snapchat community,” Mary Ritti, a spokeswoman at Snapchat, wrote in an e-mail to Bloomberg. “We have no further comment at this time.”
Snapchat valuation reaches $10 billion, showing exponential growth
Snapchat was launched in 2011. Two years later, the company was valued at $860 million. Facebook attempted to buy Snapchat for $3 billion last year, but the owners refused the offer. Now Facebook tries to replicate Snapchat’s success with its own app called Slingshot, although so far unsuccessfully.
Snapchat users can send photos or videos with added texts or sketches. These are called ‘snaps’ and are set to autodestruct 1 to 10 seconds after they are viewed by the list of recipients.
Right now, Snapchat needs to find a way to monetize the operations and will introduce a new option soon. Snapchat Discovery is a service which will help advertisers deliver content to users.
Advertisers already use a channel to communicate to users. Snapchat Stories live for 24 hours and users must actively search them. Some big brands already used this particular service, but Discovery will offer them more power. For people aged 18 to 34, Snapchat is the third most used mobile app, after Facebook and Instagram, according to a ComScore report from August. However, half of Snapchat users are aged 18 to 24. Snapchat valuation reaches $10 billion with the latest investments, but the company must adapt its model to ensure the long-term growth and stability. As ComScore suggests, Snapchat will probably monetize through high volumes of ads.