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Alibaba

Alibaba invests US$200m in blocked-in-China messaging app Snapchat

PUBLISHED : Thursday, 12 March, 2015, 12:42pm
UPDATED : Wednesday, 20 June, 2018, 3:10pm

Chinese e-commerce giant Alibaba Group has invested in US photo messaging app Snapchat, according to multiple reports. 

Citing sources close to both companies, Bloomberg reports the deal is worth US$200 million, giving Snapchat a valuation of US$15 billion and rocketing the messaging app up the charts of the richest start-ups after many forecast disaster following CEO Evan Spiegel's decision in 2013 to turn down a US$3 billion offer from Facebook to buy the company outright. 

According to reports, Snapchat was in discussions last month to raise US$500 million for a valuation of between US$16 billion to US$19 billion. Alibaba's planned investment would fall outside of that round of financing, a person familiar with the situation told Bloomberg

The Snapchat investment is Alibaba's latest expansion into the Silicon Valley start-up scene. Previously the firm invested in video call app TangoMe, mobile search profider Quixey, and ride-hailing service and Uber competitor Lyft. 

Snapchat, which has around 200 million monthly active users, primarily in the US, lets users send photos and videos which self-destruct after a defined period of time (usually around 10 seconds). 

Lu Jingyu, a mobile internet analyst with Beijing-based consultancy iResearch, said Alibaba has been trying to enter the mobile social networking market for some time now, but its own products have failed to get a foothold in the face of stiff competition.

"WeChat [showed how an app] can be turned into a platform, on which many other scalable products can be built. For Alibaba to break into the market, investment or buyout is the quickest way to do it," she said.

"SnapChat is proving popular globally, so this investment will not only let Alibaba have a good product, but also help it stand out from the rest of the Chinese competitors in the instant messaging sector."

One major hurdle remains however. Snapchat, like many foreign messaging apps including Facebook Messenger, Line and KaokaoTalk, is blocked in China.