Snapchat is at it again, raising even more funding, $650 million in equity, which values the social network at a staggering $16 billion.
It's the latest funding round which has seen the company grow more than 200 times in value since February 2013 when Snapchat was worth only $70 million.
When CEO Evan Spiegel turned down a $3 billion bid from Facebook for his company later that year, many considered it foolish, but now just 18 months later his company is worth more than four times that, according to CNBC. As well as the $650 million raised, Snapchat has reportedly earmarked a further $112 million in stock for a later sale. The new investors include Alibaba, Fidelity, York Capital and Glade Brook Capital.
The company already raised $200 million from Alibaba in March, bringing the total venture capital raised by Snapchat to $848 million.
Earlier this week Spiegel admitted that Silicon Valley is living in a tech bubble fueled by an easy money policy and low interest rates, a bubble he believes will burst. "I think that people are making riskier investments and ... there will be a correction," he told the audience at Code Conference in LA. His company's giant valuation and relatively meager revenue would appear to put Snapchat at the tip of this bubble.
Snapchat Valuation Rise
- February 2013: $70 million
- June 2013: $800 million
- November 2013: $3 billion (Facebook bid)
- August 2014: $10 billion
- May 2015: $16 billion
The reason the money is flowing toward Snapchat is the huge amount of video watched on the social platform and the advertising money that it promises to bring. Snapchat currently has about 100 million daily active users, just one-tenth the size of Facebook's user base. However, Snapchat users watch roughly half the amount of video every day that is viewed on Facebook.
The network's new discover feature launched in January, where users can view video from partners such as National Geographic, ESPN, CNN and Vice Media, has helped boost viewing figures and advertising opportunities.
Snapchat is also exploring other revenue lines and last week invested in mobile shopping app Spring which could allow the social network to launch a shopping feature, for users to browse through brands in the same way they browse media videos through Discover.
Spiegel also admitted at Code Conference this week that eventually he would like to bring his company to an IPO. This latest round of funding has no doubt taken Snapchat one step closer to that big payday.
