Alibaba Sinks $200m In Snapchat

Alibaba has doled out $200 million to invest in photo-messaging app Snapchat, a source familiar with the deal said, striking its latest Silicon Valley deal as the Chinese e-commerce company builds up mobile services.

According to Bloomberg, the investment values the company at around $15 billion.

This places the four-year-old company into the top ranks of privately-held start-ups.

Snapchat’s latest valuation is a massive increase for a company that Facebook offered to buy in late 2013 for $3 billion.

Los Angeles-based Snapchat, which allows its more than 100 million users to send photo messages that disappear after a few seconds, had sought capital to extend its core service.

In January, it began carrying videos and articles from mainstream media outlets such as CNN and ESPN, bringing Snapchat into closer competition with Facebook and Twitter.

It is unclear what value the start-up would bring to Alibaba, which handles more online commerce than Amazon and eBay combined.

The Chinese company, which has been coping with a steady increase in shopping via smartphones and tablets, has made it a priority to develop mobile services.

Alibaba’s investment spree comes as the company plans a major move to win US business this year by offering American retailers new ways to sell to China’s vast and growing middle class.

Led by Michael Zeisser, cable magnate John Malone’s former dealmaker, the Chinese company has steadily expanded its portfolio of American investments over the past year or two. It has invested in a raft of US start-ups including rides-on-demand service Lyft and messaging app Tango.

Silicon Valley insiders who have held discussions with Alibaba say its US deals are central to its strategy of becoming the world’s dominant e-tailer. Snapchat would rank amongst its largest investments in the country so far.

A month ago, Bloomberg reported that Snapchat is looking to raise as much as $500 million in a new funding round that would value the company at up to $19 billion. The Alibaba investment would not be part of that previously reported round, Bloomberg reported on Wednesday.