Snapchat is looking to raise new funds at a $3.5 billion valuation, will wait for more money
Snapchat is hot right now. So hot, in fact, that is turning down offers to be bought for billions of dollars. Yes, BILLIONS. As in multiple.
We all know by now that Facebook tried to buy the app for over $1 billion after it bought Instagram for the same amount in early 2012, but Snapchat turned down the offer.
The social network apparently recently made another offer, though, this time for three times that amount. But Snapchat, once again, turned them down, according to a report out from the Wall Street Journal on Wednesday.
Apparently the company's co-founder and CEO, Evan Spiegel, believes he can get a better deal if he waits. If the company can grow both is users and messages, then it will have an even bigger valuation.
Not that the company is having any trouble in any of those departments.
Launched in 2011, Snapchat has seen some surprising growth. It recently announced that its users were sending 350 million snaps every single day, up from 200 million in June.
And it was recently reported that the company was looking to raise a new round of funding, probably in the range of the hundreds of millions, which would value it at $3.5 billion.
This new funding would come only months after the company raised $60 million in Series B funding from IVP, with help from General Catalyst, Benchmark Capital, Lightspeed Venture Partners, and SV Angel in June. The company has raised a total of $75 million altogether.
With that looming, Spiegel, sources said, will not think of selling the company until early next year, at the earliest.
What is most impressive is that the company is getting all of this money and attention while it has not even proven that it can make any money yet.
Spiegel addressed this at the TC Disrupt last month, saying he wanted to company to start generating revenue before its next funding round.
“We’ve been thinking a lot about the future of the product,” he said. “We are a business, and we want to make money, but the way we think about monetization has changed. We’ve looked to Tencent [an Internet portal], which makes the vast majority of their revenue from in-app transactions. They had to build things that people wanted to buy. That’s a really scary challenge, to make things that people want.”
It's no surprise that Facebook wants to scoop up Snapchat. As I noted earlier, it tried to buy the company once already. And, when that didn't work, it tried to copy it.
Facebook tried to build its own Snapchat competitor called Poke. The app allowed users to send each other messages, photos, or videos that will only had a set time limit before they expire. Needless to say, the app was a big failure.
So, when the time is right, and Spiegel does decide that he wants to sell, expect Facebook to make a big play for finally getting the prize it wants so badly.
A Facebook spokesperson would not comment on the report. Snapchat could not be reached for comment.
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