By Dow Jones Business News,
July 30, 2014, 03:08:00 PM EDT
By Douglas MacMillan and Juro Osawa
Snapchat is in discussions to raise a new round of financing from Alibaba Group Holding Ltd. in a deal that could
value the mobile-messaging startup at about $10 billion, according to people familiar with the negotiations.
The talks may involve other investors and could fall apart before a deal is reached, the person said. Bloomberg
earlier reported the possible investment from Alibaba.
Spokeswomen for Hangzhou, China-based Alibaba and Snapchat in Los Angeles declined to comment.
An eleven-figure valuation for a startup with close to zero revenue and an app that didn't exist four years ago
would mark a new high watermark in this era of investor optimism, as financiers compete to buy shares of the hottest
technology companies and drive up valuations.
The discussions also highlight the growing allure of U.S. tech startups to China's largest e-commerce giant. As
Alibaba prepares to hold an initial public offering later this year, it has made a series of investments in young
Silicon Valley companies such as mobile video-call app TangoMe Inc. with an eye toward expanding into the U.S. market.
Alibaba is also battling its homegrown rival, Tencent Holdings Ltd., in fast-growing areas like mobile messaging as
they compete for China's more than 500 million smartphone users. Tencent, which operates the popular WeChat smartphone
chat application, is trying to offer more e-commerce services to the messaging app's nearly 400 million monthly active
Alibaba, whose own messaging app, Laiwang, has far fewer users than WeChat, has struck a number of deals with other
Chinese companies since last year to bolster its services for mobile users. Among those deals, Alibaba bought a stake
and later reinvested in Sina's Twitter-like Weibo microblog business, and bought a stake in mobile-mapping firm AutoNavi
Snapchat makes no money from its mobile app, which sends visual messages that vanish after a few seconds. But the
increasing popularity of the service with young smartphone users has sparked interest in the business, evidenced by
Facebook Inc.'s acquisition offer for Snapchat of around $3 billion and an investment led by Coatue Management LLC
valuing the startup at more than $2 billion, both last year. Facebook signed the largest deal in this space earlier this
year, agreeing to buy WhatsApp for $19 billion.
Write to Douglas MacMillan at firstname.lastname@example.org and Telis Demos at email@example.com
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