Yahoo is reported to be in talks with messaging app maker Snapchat about an investment that would reaffirm the start-up’s $10 billion valuation.
According to The Wall Street Journal, Yahoo plans to use $20 million from the cash it generated through an early investment in Chinese e-commerce giant Alibaba to invest in Snapchat.
The same publication reported in August that a funding round had pushed Snapchat’s valuation to $10 billion. It was believed that venture capital firm Kleiner Perkins Caufield & Byers agreed to invest $20 million in May, giving it a stake of less than 1 per cent.
Snapchat was previously reported to be in talks with Chinese e-commerce giant Alibaba about a similar level of investment. These talks were believed to have ended, however.
The company is also reported to have rejected a $3 billion acquisition bid from Facebook late last year.
Although it is yet to generate revenue, Snapchat is proving attractive to investors due to its popularity with young users.
It was recently revealed that Snapchat had reached 100 million monthly active users. The company claims that more than 700 million pictures are sent via its service and more than 500 million stories viewed every day.
Along with the addition of text, there are signs that Snapchat is looking to monetise its service, with reports that it is to gain new functionality, including support for advertising.
Although Yahoo is only believed to be acquiring a stake in Snapchat, the partnership could be an important way to distribute its content, apps and ads.
The web company is pursuing a mobile-focused strategy, having revamped its mobile offerings and acquiring developer talent and app technology under the stewardship of CEO Marissa Mayer.