China’s e-commerce giant Alibaba Group, in a move to beef up its mobile services, reportedly will invest $200 million in Snapchat, a mobile app that sends photos and messages that disappear after a few seconds.
Bloomberg, citing unnamed sources familiar with the deal, reported the investment from the Chinese firm would give Snapchat a valuation of $15 billion.
The Los Angeles-based startup, which claims to have more than 100 million users, started carrying videos and articles from mainstream media outlets such as CNN and ESPN at the beginning of the year, bringing it into closer competition with Facebook and Twitter, Reuters said.
Snapchat executives recently met with Saudi Arabia’s Prince Alwaleed bin Talal, who owns 95 per cent of investment holding company Kingdom Holding, to talk about “future potential business cooperation in the technology field”.
Bloomberg reported a month ago that Snapchat was in advanced talks with fund managers about a $500 million funding round, which would value the company somewhere between $16 billion and $19 billion. That round would make Snapchat the third most valuable venture capital-backed company, behind Uber (valued at $45 billion) and Xiaomi ($40 billion).
Snapchat turned down a $3 billion acquisition offer from Facebook in 2013 and in 2014 managed to raise funds from more than 20 investors at a $10 billion valuation.
Alibaba, China’s largest e-commerce firm, has been an active investor in tech startups recently. This month it led a round of funding that raised $60 million for Quixey, a mobile search engine that includes content within apps.
In early February it invested $590 million to take a minority stake in mainland mobile phone maker Meizu Technology, giving it a captive hardware platform for its mobile operating system. The Chinese firm didn’t specify the size of its interest in Meizu, a privately-owned company based in Guangdong province with more than 1,000 employees.