Snapchat to raise another round at a $19B valuation?

Steven Loeb · February 17, 2015 · Short URL:

The deal would make Snapchat the third most valuable VC-backed company in the world

Remember a couple of years ago, when Snapchat rejected a $3 billion acquisition offer from Facebook? At the time some thought the move was foolish... including me. I mean, the idea was cool, but could it survive on its own, and not just as a feature offered by a larger company?

Well, turns out the company was right because less than two months after revealing that it had ended 2014 with an additional $485 million in funding, Snapchat is already back, and ready to raise yet another round, according to a report out from Bloomberg on Tuesday.

And this look to be a big one: the company wants to raise as much as $500 million at a $19 billion valuation. That would wind up making it the third-most valuable venture-backed company in the world, behind only Uber, which is valued at $40 billion, and Xiaomi, which is valued at $45 billion.

Snapchat has already raised $648 million, from investors that have included Tencent, SV Angel, Lightspeed Venture Partners, Benchmark, General Catalyst Partners, Institutional Venture Partners and Coatue Management.

VatorNews reached out to Snapchat to confirm the report and to find out more information, including any participating investors, but a company spokesperson declined to comment.

This new round would be a validation of all the work Snapchat has done in the past year, or so, to put to rest any fears that investors might have in its ability to monetize.

Last year saw the launch of a payments feature through a partnership with Square, as well as Snapchat's first ads, putting them in the Recent Updates section and allowing users to not have to look at them if they don't want to.

The company recently entered into partnerships with various media companies and giving them a feature that will allow them to connect directly with the Snapchat audience.

The Discover feature, as it is called, is made up of 11 unique channels: one for each media partner, plus a Snapchat channel. Those channels include ESPN, Comedy Central, Cosmopolitan, Daily Mail, Food Network, National Geographic, People, Yahoo News, CNN, Vice and Warner Music. Each one will feature photos, videos and other long-form content.

The rise of Snapchat has coincided with a huge surge in venture capital deals and valuations. Last year, venture capital funding hit its highest annual mark since 2001.

In all, $47.3 billion was invested across 3,617 deals in 2014, representing a 62% increase in the amount invested year-to-year from 2013. Deals were particularly strong in the second and fourth quarter of the year, with both of them reaching over $13 billion in funding, and each coming close to 1,000 deals.

2014 also saw a surge in the number of companies gaining $1 billion valuations; in 2014 alone, 38 different companies entered the $1 billion club, more than the three previous years, when only 22 companies made it combined.

Snapchat is doing the right thing, proving its long-term financial opportunities, at exactly the right time, when VCs are willing to throw more money at companies than anytime in the last decade. And it is paying off nicely.

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