Snapchat is making its way up the valuation ranks as new reports indicate that the social messaging app could soon be worth $16 billion, in light of its new financing.
A report filed with the Securities and Exchange Commission late last week (May 29) shows Snapchat has raised $537.6 million in the sale of common stock, which would be what led to the valuation boost from the previous projections of $15 billion. Snapchat said it has offered to sell up to $650 million of its stock. In the filing, there was no indication of who the buyers or sellers of the stock were. The most recent financing round would top off at $1.2 billion for SnapChat, according to CrunchBase.
Because Snapchat's financing round is in common stock, the company may have had the edge in the negotiation process, one financial analyst suggested.
“Investing in common stock, especially at a $16 billion valuation, is not normal,” Anand Sanwal, chief executive officer of venture-capital data firm CB Insights told Bloomberg. “It highlights the leverage that Snapchat had in these negotiations because the investors aren’t getting the protections they normally ask for.”
It was reported in March that Snapchat was valued at $15 billion after Alibaba, China’s eCommerce powerhouse had dropped $200 million into it. Other investors that helped drive up its valuation included Yahoo, venture-capital firm Kleiner Perkins Caufield & Byers, Benchmark, General Catalyst Partners, Institutional Venture Partners, Lightspeed Venture Partners, Coatue Management LLC, and DST Global.
Unlike most startups, Snapchat reportedly goes after investors individually, rather than in large rounds where the investments are lumped together to establish a valuation. That’s why calculating how much the company is currently worth is more uncertain.
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