Alibaba is reportedly investing $200 million in Snapchat, the four-year-old Silicon Valley startup famous for its eponymous disappearing messages app.
Bloomberg reports that the latest round of funding for Snapchat pegs the firm at a valuation of $15 billion, which is far below the $18 billion to $19 billion Snapchat was previously hoping for in a funding round that would raise $500 million.
Snapchat CEO Evan Spiegel, who is famous for turning down a $3 billion acquisition offer from Facebook, did not provide details about further funding plans.
"We continue to hire across the business," Spiegel said during a talk at the Montgomery Summit in Santa Monica, California. "We are famous for not talking about the future."
Still, the latest investment from Alibaba puts Snapchat up there with three of the most valuable privately held technology companies in the world, tying up for third place with software and services firm Palantir and sitting well behind Chinese smartphone maker Xiaomi, which has a valuation of $45 billion, and Uber, which is pegged at $40 billion.
With 100 million monthly active users posting 700 million disappearing messages and viewing 500 million of these "snaps" every day, it is high time for Snapchat to begin expanding its service to monetize the platform. In January, it launched a new section called Discover, where Snapchat partner media companies such as ESPN, CNN, and National Geographic can post short-form video ads that disappear 24 hours after.
It is unclear, however, what Alibaba plans to do with Snapchat. The Chinese e-commerce company processes way more e-commerce transactions than both Amazon and eBay combined, but it has yet to make a dent in the U.S. e-commerce space. Recently, Alibaba said it has seen a rapid increase of users accessing its website via smartphones and tablets, and the firm is looking to beef up its services for people accessing through mobile.
Sources who have spoken with Alibaba say the e-commerce firm believes that its investments in partnerships in the U.S. are a significant part of its strategy to become the world's leading e-commerce company. Under the oversight of the firm's U.S. investment group chairman Michael Zeisser, who previously worked for John Malone of Liberty Media, Alibaba, with a $24 billion cash hoard, has made investments in plenty of other technology companies, including Uber competitor Lyft, messaging app Tango, and search provider Quixey. It has also made hefty investments in social media, including China's Weibo and its own social media app called Laiwang.
