Though the company didn’t disclose the funding agency initially, it has being confirmed from sources that private equity firm Coatue Management chose to put in the sum. Evan Spiegel, Co–Founder SnapChat confirmed that the funds will be utilized to nurture the platform further.
So far the company has been made richer by US$ 123 Million via multiple rounds of funding. But it has no revenue to speak of. It is supposed to have 30+ million monthly active users, who, the company claims send-out over 400 Million Snaps per day! This figure easily towers over Facebook by a good margin of 50 Million!
It is interesting to know that companies like SnapChat, have never divulged complete details about their platform and users. These companies only put forth a few snippets of information that seem to propel their platform to newer heights of popularity. Additionally, SnapChat was rumored to have been approached by Facebook with an acquisition offer of US$ 3 Billion. Though apparently Spiegel turned down the offer, these are still unconfirmed rumors.
Despite no reliable source of income, SnapChat has illustrious financial backers like Benchmark, Institutional Venture Partners (IVP), and Lightspeed Venture Partners (LSVP). Even Tencent, the owners of WeChat have participated in a funding round.
Does SnapChat deserve such a high valuation?
While it is difficult to value a company based on such a small amount of information, the company is indeed showing healthy adoption. Similar to other platforms, which are apparently eating into Facebook’s time-share, SnapChat has carved a niche in the photo sharing segment of social networking. Photos sent out by users have the ability to vanish or self-destruct from the recipients’ device after a few seconds, ensuring protection of privacy and prevent misuse.
Rumor mills apart, with the latest funding round SnapChat has proven that ‘Vanity Metrics’ do indeed work. What do you think?