The mobile messaging app Snapchat is said to be raising a round of venture capital that could see the company’s total valuation as high as $19 billion. That will make it the third-most valuable venture-backed company in the world and represents a massive increase in valuation versus Facebook Inc which offered to buy it for $3 billion in late 2013.
Snapchat, which makes a mobile messaging app for sharing pictures that disappear within seconds, reportedly intends to raise as much as $500 million. Executives fund managers were holding advanced discussions, according to media reports.
The Los Angeles-based company is likely to see its valuation in a range of $16 billion to $19 billion in the financing round. That would put Snapchat’s ranking behind only taxi-hailing app maker Uber Technologies Inc. and the world’s fastest-growing cell phone maker Xiaomi Corp. in the top three venture capital-backed start-ups, according to data tracked by researcher CB Insights. Xiaomi has market worth at $45 billion, while Uber’s most recent financing pegged its value at $40 billion.
That value has no bigger difference from the $22 billion which Facebook Inc. paid last year for WhatsApp Inc., a messaging company that now claims to have 700 million users.
Snapchat’s valuation has been rallying since it came into existence in 2011 out of a Stanford University fraternity house. Chief Executive Officer Evan Spiegel, 24, was not ready to sell the company for a $3 billion, a bid made by Facebook in 2013, and kept on increasing funds from 23 investors at a $10 billion valuation in 2014. That surge was seen along with a rise in venture spending to the best level in more than a decade.
The major driving force behind the drastic increase in valuation includes its growing active user base and extending service. Recently in January, it enables users browse content from 11 different channels such as CNN and ESPN, making Snapchat in close rivalry with Facebook Inc and Twitter Inc.
