Snapchat Inc. in a new round of funding, is said to be raising $19 billion or more. Back in 2014, spending $19 billion on a software company, especially on a mobile messaging one, seemed like a crazy amount of money. When Facebook acquired WhatsApp, the newswires broke, today we are at a point where billions invested in an instant messaging company makes more sense.
If you didn't know yet, Snapchat is a cross-platform photo and video messaging service. If the round of funding proceeds as expected, Snapchat would be ranked third only behind Uber Technologies Inc. and Xiaomi Corp - both of which are valued at $40 billion and $45 billion respectively. Mark Zuckerberg was wise and quick enough to identify the opportunity of expanding the user base and cutting the risk of losing share to WhatsApp when it last year successfully acquired it. Recently, Snapchat launched its 'Discover' feature where users can browse through news and entertainment videos, this indeed would drive user engagement and possibly some monetization in the future from channels that would like to promote their content to the entire user-base.
Indeed, Instant Messaging is what users most associate smartphones with, the list of social networks and Instant Messaging services is growing day-by-day with most of these services receiving funding every year. It is clear that investors want to pump money into something that the youth thinks is the "next big thing". Since monetizing a chat app is not as easy and selling data to marketers for ad placements becomes a risky move, fresh investment every year becomes a must. Snapchat has managed to pull off successful partnerships with content networks like Vice Media Inc. which first did an exclusive content partnership with them. Another feature, Snapcash allows you to transfer money to your friends through Square Cash. Clearly then, Snapchat has a lot of things on its mind and has been aggressive in rolling out new features of late.
There has been an incident when Facebook offered Snapchat $3 billion which the company promptly rejected. With its app 'Slingshot', Facebook hoped to create a similar fun experience for people who like to share selfies in real time, but that hasn't taken off as well as Facebook would have liked. However, the fate of a startup really lies in how much independence they are given post acquisition. If allowed to function just as independently, the company could do some amazing things. Facebook has been pretty straight in saying that WhatsApp and Instagram function independently so that its essence is not lost. While both the apps are doing pretty well, only time would tell if they still stay that way and such is the case for Snapchat as well.