Alibaba invested $200m into Snapchat in the latest startup deal

March 13, 2015 Blog
According to BBC, Alibaba has put as much as $200 million in the image-exchanging application Snapchat. So far, it is the latest Silicon Valley deal by Alibaba that recently started expansion on the mobile services market. Before Snapchat, there was another Alibaba’s project - Laiwang (来往) app, a WeChat analogue. According to Bloomberg, Snapchat, Inc. is worth of around $15 billion. This makes Snapchat one of the top-ranked privately held company. It means a big leap for the company, since Facebook offered $3 billion to take it over in 2013. The startup with the headquarters in Los Angeles, which allows more than 100 million users exchange photos instead of words that stay only for a very short period of time, was in want of big capital investment to expand its main service. In January, it allowed videos and publications from the main media companies such as CNN and ESPN on the platform, making Snapchat compete with Facebook Inc and Twitter Inc. It is not revealed what value Snapchat will bring to Alibaba. Alibaba faced a strong competition in the mobile devices industry. To secure the sector of online payments and shopping, Alibaba started developing mobile services. Alibaba's investment spree is directly connected to the company's plans of winning over US market that were announced earlier this year. It offered American businesses new methods to export their products to China's vast and growing middle class. Led by Michael Zeisser that is responsible for US Investments at Alibaba Group, the e-commerce giant has markedly enlarged its portfolio of USA investments over the past several years. It has spent lavishly in a lot of American startups (among other rides-on-demand company Lyft and yet another app Tango). In March 2014, the company reported it purchased minority ownership in TangoMe, a smartphone messaging business, for $215 million. And in 2013, Alibaba invested $206 million in ShopRunner, an Amazon rival. Silicon Valley experts claim that Alibaba's American deals are critical to its plan of becoming the world's most important e-tailer. It is estimated that Snapchat earned the place at the top of M&A deals in the country so far. Recently Bloomberg reported that Snapchat is planning to earn as much as $500 million in a new funding round that would make it worth of up to $19 billion. The Alibaba investment would not be included in previously announced round, Bloomberg stated.