February 20 ,2015 | by Thiago Kiwi

Snapchat seeks funding that values firm at $19 billion

Messaging app Snapchat is reportedly seeking a new round of funding that would value the company at $19 billion.

The three-year old messaging app, Snapchat, is looking to become the world’s third-most valuable venture-backed tech company as it is said to be in talks for a new round of funding to raise as much as $500 million, which would value the Los Angeles firm at a staggering $19 billion.

 

It would mean Snapchat’s value has shot up over the last 12 months, as only a year ago the company was valued at $10 billion. However, it’s since become the number one method for young people to share as many as 700 million photos every day.

The new valuation would place the tech firm under China’s smartphone producer, Xiaomi ($45 billion) and taxi-service Uber ($40 billion), according to data from researcher CB Insights. Furthermore, the value is not far off the $22 billion that Facebook paid to acquire messaging service WhatsApp last year.

 

But why has Snapchat’s value rocketed so much so quickly? It’s thought that the app’s popularity has captured the interest of brands and agencies that are attempting to reach the elusive market of teens and young adults that don’t watch real-time TV or read magazines and newspapers, therefore bypassing all the adverts. It’s a market that many are willing to pay a lot of money to reach.

The fact that messages sent on Snapchat disappear within a matter of seconds means that users don’t add to their online records, a trend that continues to become more important to the average consumer. Adding to the service’s popularity is its newly introduced service, Discover, which curates news and entertainment and allows users to browse what’s on offer in bite-size form.

Snapchat only started showing short-term adverts in its app last year, but user choose whether to view them or not and the adverts disappear after they are clicked on, much like the other content. Now the app’s strong user base and popularity is driving interest from advertisers and brand promoters hoping to tap into its market.

 

 

<Top image: AndroidCentral>

Thiago Kiwi

Thiago is the LSBF Blog Editor who manages news and features content on the site, and writes about business, finance, technology, education and careers.

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