Snapchat raises another $175M, but its valuation stays flat

Steven Loeb · March 3, 2016 · Short URL:

The company is worth $16 billion, the same as it was last year, even as down rounds have increased

Market slowdown, schmarket schowdown. While the rest of the investor world is shrinking, Snapchat is charging full steam ahead.

The company has now raised another $175 million in venture funding, according to a report from the Wall Street Journal on Thursday. The funding came from Fidelity Investments, and it gives Snapchat a total of $1.34 billion raised in total venture funding. 

This is the first funding that Snapchat has raised since taking $537 million last year. Back then it was valued at $16 billion, and now it's valued at... $16 billion.

Ok, so maybe you're thinking that that's not a good sign, and normally it wouldn't be for a company of Snapchat's size to take a flat round, but these are special circumstances.

First of all, Fidelity was one of the investors in Snapchat's $538 million round last May, which made Snapchat the fourth most valuable private company in the United States, behind Uber, Airbnb and Palantir.

Then, in November of last year, the firm decided to write down the value of its stake by 25 percent, dropping it from $13.9 billion to $10.4 billion. So the fact that Fidelity reinvested at the same valuation the company was given last time is actually something of a triumph.

There's also the fact that down rounds are now in vogue. In the fourth quarter of 2015, 82 percent of rounds were up rounds and 12 percent were down rounds, a notable change from the third quarter, when 86 percent of rounds were up rounds and only four percent were down rounds.

Down rounds increased across all series levels, as demonstrated in the graph below, with the later-stage rounds seeing the biggest jumps. Series E (and higher) down rounds went up by 15 percent and Series D rounds went up by 13 percent.

We've also seen some pretty big companies taking down rounds, including Jawbone, which recently raised funding at a $1.5 billion valuation, down from $3.3 billion. Foursquare also raised a down round, raising money at a $250 million valuation, down from $650 million. 

In this kind of environment, staying flat seems to be almost as good as going up.

This round could give some hope to Slack, which is hoping to raise a $150 to $300 million round at a $3.3 to $4 billion valuation. As of its last funding, it was valued at $2.8 billion.

Venture capitalists invested $11.3 billion into 962 deals in the fourth quarter of last year, both down significantly quarter-to-quarter. Dollars fell 32 percent from $16.6 billion in Q3, and deals fell 16 percent from 1,149. The $11.3 billion is also down 28 percent from the $15.7 million invested in the fourth quarter of 2014. 

Investments in later stage companies, which includes Slack, were hit especially hard. They dropped 33 percent to $3 billion going into 169 deals in the fourth quarter. The average Later stage deal in the fourth quarter fell to $17.8 million, down from $20.9 million in the prior quarter.

VatorNews reached out to both Snapchat and Fidelity for confirmation of this new round, We will update this story if we learn more. 

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