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Snapchat close to raising $100 million

42 points| mikegreenspan | 13 years ago |gigaom.com | reply

48 comments

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[+] pdog|13 years ago|reply
For those wondering why, check out slides 14 and 15 of the 2013 KPCB Internet Trends report:

http://www.slideshare.net/kleinerperkins/kpcb-internet-trend...

[+] w1ntermute|13 years ago|reply
Uh, that doesn't explain how they're making money, or plan to. More users = more photos transmitted = more bandwidth = more money burned, and not earned.
[+] joonix|13 years ago|reply
What does Snapchat need $100M for? The idiocy continues.
[+] joelandren|13 years ago|reply
Trying to build out the next generation mobile platform? People never raise money for their current product.
[+] CoachRufus87|13 years ago|reply
And then the kids will move on to the next thing. Hopefully, for the sake of their investors, that happens after they've been acquired for a billion. Rinse, repeat.
[+] citricsquid|13 years ago|reply
Didn't people say the same about instagram and twitter? There are services that have the ability to stick around.
[+] netc|13 years ago|reply
And those will be a different set of kids - next generation.
[+] dataisfun|13 years ago|reply
Does snapchat really need $100M?
[+] bryanh|13 years ago|reply
If I were guessing (and I am): probably not, but later stage investors usually want their ~10-20% of the company in a round. After a string of "no, we don't need that $YYm++", the valuation (the only truly negotiable number in the negotiation) gets high enough that it is insane to continue saying "no".
[+] adastra|13 years ago|reply
I tutored teenagers in physics and math for a while to make ends meet. And they love snapchat. They are also basically ready to be done with facebook.

There are two reasons they prefer snapchat to facebook and texting, respectively, both of which basically come down to privacy:

1) Their parents are on facebook

2) They know that what they say today might look stupid tomorrow, and facebook (and the phone companies) save everything, forever.

Basically, they have figured out that what they say when they are 13 will look ridiculous when they are 17. And what they say when they are 17 will be really cringe-worthy when they are in college. They also know that facebook's track record on privacy is awful, so even if they went through the trouble to create different types of friend lists, with different access settings, etc., facebook could just change everything tomorrow.

I could easily see snapchat expanding to build an entire social network built around the "only see for 10 seconds and its gone" feature, and droves of teenagers moving onto it. If they do, facebook could be in serious trouble.

[+] CoachRufus87|13 years ago|reply
How could an entire social network be built around the "only see for 10 seconds and its gone" feature? I'm genuinely curious.
[+] argonaut|13 years ago|reply
It is important to note that in the startup community it is generally a good tactic to raise money when you don't need it, because that gives you enormous leverage in the negotiation. If, on the other hand, you're in a negotiation where the other side knows you need the money, you are going to get much worse terms.
[+] yesplorer|13 years ago|reply
This holds true when you are building a product where you'll potentially need money to scale but you know that though you are growing rapidly, your current infrastructure be enough for a while. There, you can raise money against the future.

But this is snapchat. Don't expect them to become another Facebook, don't expect them to become another twitter. Because they've already defined their use case, which is simple and straight forward so why $100m?

[+] bbrunner|13 years ago|reply
Great for them. Snapchat is the only service in recent memory that I've actually overheard high schoolers use as a verb. If you can define a new way to share something that gets its own language, you've got something pretty interesting.
[+] coderguy123|13 years ago|reply
these valuations just don't make any sense.
[+] crapshoot101|13 years ago|reply
What I'd be curious about is how much of this round (if any) is secondary / going to cash out some early employees / founders / early investors.
[+] dxhdr|13 years ago|reply
It's all going toward Snapchat R&D and sales, of course. Staying on the cutting edge of technology and maintaining your paying customers is tough in today's market.
[+] mcintyre1994|13 years ago|reply
I've never seen that sort of ratio discussed here, is it normal to be raising at 20% of your valuation?
[+] argonaut|13 years ago|reply
Yes. That is a very standard ratio.
[+] JonFish85|13 years ago|reply
The early investors in Zynga have some extra cash to invest?
[+] jusben1369|13 years ago|reply
My favorite part is they appear to be snubbing the Valley and the traditional VC's. That's brave and admirable and healthier for the entire ecosystem.
[+] tolmasky|13 years ago|reply
So when is Facebook going to buy snapchat?
[+] dxhdr|13 years ago|reply
Ha ha ha thank you Bernanke, this is amusing. Dot com 2.0 has arrived! When is the IPO?
[+] lotso|13 years ago|reply
Interesting to see everyone speculate on how terrible of an investment this is when most users couldn't wrap their head around the concept of Snapchat ~7 months ago.

Here's why the need $100 million: They are building the future of chat and they already have incredible engagement and growth month over month.

[+] dfrey|13 years ago|reply
How to make $100 million disappear in 10 seconds.
[+] michaelxia|13 years ago|reply
havent seen this cinderella story before....