Snapchat scored $1.8 billion in funding round which started last year
Snapchat has added a number of new investors on its board after it completed funding rounds of $1.8 billion last year, according to a filing with the Security and Exchange Commission. This mega funding round has been ongoing since May 2015 and has taken the company’s valuation to $18 billion.
The current valuation is higher than March 2015’s valuation of $16 billion. Investors in the funding round include Sequoia Capital, General Atlantic, Coatue Management, and Fidelty along with other venture capitalists. The company has now raised $2.65 billion through funding rounds.
Most of the investors have agreed to get Snapchat’s common stocks rather than the preferred stocks. Investors in startup companies also want preferred stock, which gives them certain privileges over the common stock holders. These privileges include voting rights and getting paid first in case of liquidation or acquisition.
Earlier this week, it was reported that Snapchat has authorized the sale of new stocks, which could value it to around $22.7 billion. The app has grown rapidly over time and has attracted several investors.
Some venture capitalists firms like Sequoia Capital rarely make any investments in companies that are highly valued. They usually make investments in startups and go for either Seed funding or Series A funding. However, this investment shows that these venture firms believe that Snapchat will become as big as Facebook in the coming years, which is currently valued at $342 billion.
Snapchat’s funding round comes at a time when investors have become more vary of making investments in startup companies. Over the past year, startup shares have been marked down by investors as funding environment has cooled down. This shows that if you are a popular startup company, investors will provide you with funds.
It is expected that the funding round will be used by the company to hire more people in different countries. It may also utilize these funds for research and development projects to offer innovation. Snapchat will also use the funds to buy out other startup companies that offer similar products. Earlier this year, it acquired Bitmoji for $100 million.
According to TechCrunch, Snapchat’s revenue for 2015 stood at $59 million. The revenue started to increase after a slow first quarter as the company pushed its monetization efforts to increase profits. It plans to achieve its revenue target of around $250–300 million in the current year, which is four times more than what it earned last year.
As it aims to increase its advertising business, Snapchat has also signed multiple deals with Nielsen and Adtracker to attract more advertisers. The company doesn’t keep its advertisement revenue completely with itself; it rather splits the revenue with the media companies that post ads on its platform.
According to a survey by Piper Jaffray last month, Snapchat is the most popular social media platform amongst teenagers. It beats the likes of Facebook, Twitter, and Instagram to lead the race with users who spend at least 30 minutes on it each day.
Snapchat mentioned that its users share more than 10 billion videos every day. This puts it ahead of Facebook that has been struggling to give a boost to its video options. Founded in 2011, the app currently has 100 million daily active users. Its user base is expected to increase even further due to its popularity.