That quality possessed by some which draws all others with its magnetic force. With ‘It’ you win all men if you are a woman and all women if you are a man. ‘It’ can be a quality of the mind as well as a physical attraction. Elinor Glyn (It)
The It girl of web services, Snapchat, is close to snagging about $100 million in new investment at a valuation in excess of half a billion dollars, sources familiar with company’s fund raising efforts tell me.
Snapchat is a mobile service that allows you to send and receive photos or videos that sort-of-maybe disappear afterward. It raised $13.5 million in Series A funding from Instagram-backers Benchmark Capital. The company is based down in Los Angeles and has eschewed the Valley way to chart its own course.
The red-hot company has been fielding funding overtures from a lot of usual suspects in Silicon Valley, but sources tells us that founders have settled on an unnamed non-tradition investors (read: hedge-fund) as the source of this new money. In February 2013, the company was valued at around $70 million and now is being valued around half-a-billion dollars. One source put the post money valuation at around $700 million. The new round of funding includes some sort of a secondary component as well.
Snapchat CEO Evan Spiegel who co-founded the company with Bobby Murphy, both Stanford students, recently said that the company is seeing its users upload 150 million images every day, quite a leap from 20 million a day in October 2012. It is said to have 5 million daily active users, which actually is a pretty impressive as it is the only real measure of the actual popularity of a web service.
So why such a rich valuation? One argument — or at least the one I can make — is that as we shift to mobile there are opportunities to recreate and reinvent the social experience. Facebook is decidedly web and despite its mobile efforts, doesn’t have the purity of an experience built for mobile. Instagram was built for mobile and it created a unique culture around the service (that ultimately was worth $715 million to Facebook.) We are seeing something similar with Snapchat — which is part of what I call the “Alive Web.”
Of course, the challenge with all these services is how to take actual usage (aka engagement) and turn into dollars without impacting the community and the core service. We have seen the challenges of monetization in a mini-backlash over on post-Yahoo acquisition Tumblr. Facebook, in its attempts to grow revenue, has polluted the experience with too many ads and its division. Instagram is still searching for possible revenue streams.
But for now, Snapchat is having its moment and that means getting the cash into its coffers.
Here are some of our posts that outline and provide context as to why we find Snapchat a company and a story worth writing about:
- Realtime & the off switch.
- Snapchat and our never ending quest for impermanance. [Mathew Ingram]
- Snapchat rises: why Poke’s decline shows Facebook’s inability to invent.
- How Snapchat made a leap of faith by building atop Google’s cloud services [Stacey Higginbotham]
- Say hello to the alive web.