New funding to value Snapchat at $19 bn

Snapchat, the popular app for sharing photos, videos and text, which counts hundreds of millions of users, was seeking a new round of $500-million funding that would value it at $19 billion, Bloomberg reported citing an informed source.

According to the anlysts, the Los Angeles-based company would be valued at $16 billion to $19 billion in the financing round.

If it achieves the valuation, Snapchat would become the third most valuable venture-backed company in the world after Chinese smartphone maker Xiaomi Corp  and mobile car-booking application Uber Technologies according to data compiled by researcher CB Insights.

Xiaomi had a valuation of $45 billion, while Uber's latest round pegged its value at $40 billion.

That value was also close to the $22 billion Facebook paid last year for WhatsApp Inc, a messaging company that now counted 700 million users.

The additional capital, according to analysts would help the company monetise a long list of ideas to bring in actual revenue.

The company last year, received a capital infusion of $485 million from a group that included the prominent venture capital firm Kleiner Perkins Caufield & Byers. The money helped support a big expansion at the small start-up.

The company's workforce surged from about 35 a year ago to over 200 today and the company also opened an office in the former New York Times building near Times Square.

Besides, engineers, the growing team also included people with background in film and media to help Snapchat produce its own content to share with users and attract advertisers.

Major corporations including McDonald's and BMW were now advertising on Snapchat.

According to Rebecca Lieb, an analyst at consulting firm Altimeter Group, Snapchat had an enormous user base, and that was extremely compelling to advertisers.

The company's valuation has skyrocketed since its inception in 2011 out of a Stanford University fraternity house.

Chief executive  Evan Spiegel, 24, rejected a $3 billion acquisition offer from Facebook in 2013 and went on to raise funds from 23 investors at a $10 billion valuation last year.