Snapchat Rakes in $1.8 Billion in Series F Funding

Snapchat is at it again. According to an SEC filing made on Wednesday, Snapchat has completed its latest round of Series F funding, raising $1.8 billion in funding. This recent success may be attributable to the app’s efforts towards monetization and ever-growing user base.

Investment in Snapchat

Although some investors have previously thought that the video and text messaging platform could be a flash in the pan, it looks as though the app has significant staying power. Investors continue to invest in the photo sharing and messaging app, with no signs of slowing, Since the beginning of the year, the company has raised a significant $1.158 billion in funding. TechCruch reports that investors in this round include General Atlantic, Sequoia Capital, T. Rowe Price, Lone Pine, Glade Brook Capital, IVP, Coatue Management and Fidelity. And, although the Form D doesn’t name the company’s valuation, rumor has it that it could be pushing upwards of $20 billion.

Move towards monetization

So what is driving these strong fundraising efforts? The company’s recent efforts towards monetization are certainly boosting investor interest. In 2015, the company reported $59 million in efforts – and that’s with no real effort towards monetization in the first part of the year. This year, estimates put revenues between $250 and $350 million, and by 2017 the company is expected to be hitting as much as $1 billion. These large numbers and clear evidence of growth make it obvious why venture capitalists are bullish on the app. It looks as though a strong underlying business model will drive and accelerate financial growth in the mid-term.

Growing user base

Of course, no effort towards monetization would stick without a strong and loyal user base. Luckily, Snapchat has just that. In June 2015, the company had 89 million daily active users. Six months later, in December 2015, this number had jumped up to 110 monthly active users. So far, the geographical breakdown of Snapchat users has remained relatively consistent: the majority of users are concentrated in North America, followed by Europe as a growing second.

Investor takeaway

Ultimately, investors can learn a lot from Snapchat’s recent success – even if they’re not in the market to invest in this private monolith. Firstly, an app’s ability to monetize is a core factor to consider when picking which companies to invest in. Many of the most popular apps on the market today have found it challenging to turn their popular success into financial payoff. Snapchat has differentiated itself in the market with its elegant transition towards monetization. Secondly, customer loyalty and growth is important. It’s the users themselves that have made Snapchat a success, and allowed the company’s management to begin monetizing. Therefore, a combination of these two factors are essential in any app investment. If these bases are covered, the odds of picking a mobile web winner go up substantially for any investor in the app market.
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Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.