Snapchat gets a little help from Alibaba. Well, it does not exactly qualify as "little" when the deal involves millions of dollars. It has been confirmed that China-based e-commerce giant Alibaba is investing $200 million in the startup company.
The previous month, Snapchat had been reportedly seeking a $500 million cash infusion, which would have increased its valuation to somewhere between $16 billion and $19 billion. It did not get that many with Alibaba, but still, $200 million is still a pretty decent investment figure. With this investment, Snapchat's value will likely increase to $15 billion. This would make the company one of the top three startups backed by venture capitalists, tying it with software firm Palantir for third place, just behind Chinese phone maker Xiaomi and transport service Uber.
This marks the second time Snapchat has nabbed an investment in less than six months. Since 2013, the company has already attracted five cash infusions in all from different business entities. This is interesting because back in 2013, Snapchat once refused a $3 billion acquisition offer from social media giant Facebook.
Over the past year, Snapchat's valuation has really ballooned, thanks mostly to a $20 million investment from venture capitalist Kleiner Perkins Caufield & Byers. This earlier investment had increased the startup's value to $10 billion.
Snapchat's growth is nothing short of phenomenal, especially when you consider that the mobile app is still only three years old. More amazingly, Snapchat is as simple as any mobile app can get. Basically, it lets people share text messages, images, and videos that disappear after several seconds.
Since its inception, Snapchat has went on to become remarkably popular with the young demographic, particularly teenage users. According to research firm ComScore, Snapchat is the third most popular social media app among users aged between 18 years old to 34 years old. Facebook and Instagram are the undeniable leaders in the race, but Snapchat actually managed to upstage Twitter by a considerable margin (Snapchat scores a 32.9 percent share, while Twitter has a 23.8 percent share).
Snapchat started as a photo-sharing app in 2011. But through the years, it has incorporated new features like its video and chat functionality. This feature works the same way as your regular Snapchat texts, photos, and videos -- the chat conversations disappear after you leave the chat screen. With this functionality, Snapchat now competes with other messaging apps like Facebook's WhatsApp, Blackberry's BBM, and WeChat, just to name a few.
More recently, it partnered with CNN, ESPN, Yahoo News, National Geographic, The Food Network, Cosmopolitan, and Vice in delivering content through a service called Discover.
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