Alibaba Invests $200m In Snapchat

According to WSJ, Chinese e-commerce company Alibaba has invested $200 million in Snapchat at a $15 billion valuation. This is up from the round it raised last year at $10 billion. Snapchat is also rumored to be running official 'Our Stories' at this year's NCAA Final Four--another foray into live events. I expect to see plenty of ads inside these feeds during March Madness.

Alibaba Deal Values Snapchat at $15 Billion
Chinese e-commerce giant is investing $200 million in Snapchat

By GILLIAN WONG

March 12, 2015
 

BEIJING—Alibaba Group Holding Ltd. is investing in Snapchat Inc. in a deal that values the messaging company at $15 billion, in the latest sign of escalating valuations for technology startups.

The Chinese e-commerce giant has invested $200 million in Snapchat, according to two people familiar with the transaction. The deal values Snapchat at $15 billion, one of those people said.

That valuation marks a significant increase from previous investments. Snapchat raised funds from at least two investors, Yahoo Inc. and venture-capital firm Kleiner Perkins Caufield & Byers, in a round of funding that valued the messaging startup at $10 billionlast year. Other investors include Benchmark, General Catalyst Partners, Institutional Venture Partners, Lightspeed Venture Partners, Coatue Management LLC and DST Global.

In July, The Wall Street Journal reported thatAlibaba had held talks with Snapchat. One of the people familiar with the latest deal said Alibaba’s interest had cooled then been rekindled recently.

Snapchat has attracted significant investor attention in part because of the ephemeral nature of its messages. Its text and photo messages disappear after a certain amount of time, limiting the possibility that content will come back to haunt the user. It has become one of the world’s most-valuable startups by market valuation, according to a Wall Street Journal analysis. People who have been briefed on its internal metrics say it has more than 100 million users.

Chief Executive Evan Spiegel aims to turn his free app into a moneymaker. The company began generating its first revenue in recent months as it sold ads to marketers includingSamsung Electronics Co. and Universal Pictures. Mr. Spiegel has cited the success of Asian tech giants in building large businesses around mobile messaging apps as an inspiration for Snapchat.

For Alibaba, the investment marks its latest foray into startups. Its U.S. investments have included video call app maker TangoMe Inc., mobile search provider Quixey Inc. and ride-hailing service Lyft Inc. In China, it increased its stake last year in China’s WeiboCorp. social-media company and has invested in its own Laiwang chat app.

The deal once again puts Alibaba in the same camp as its chief rival, Tencent HoldingsLtd., which previously invested in Snapchat. Last month Tencent-backed Didi Dache, a Chinese ride-hailing app, agreed to combine with rival Kuaidi Dache, which is backed by Alibaba.

Alibaba’s investment in Snapchat was reported earlier Thursday by Bloomberg News