Snapchat May Be Valued At $4bn Despite Zero Revenues

Social app Snapchat has yet to make any revenues, but the company behind it may be valued at up to $4bn in its next funding round.

The US startup is seeking to raise $200m at a valuation of between $3bn and $4bn according to the Wall Street Journal, whose All Things Digital subsidiary is reporting separately that the round may be led by a "strategic party from Asia" and would value Snapchat at $3.6bn.

Both reports tip Chinese internet giant Tencent Holdings as the likely lead in the investment round, which would follow a $60m round in June 2013 that valued Snapchat at $800m. The startling rise in the company's valuation since then would match another social networking service, Pinterest, which has just raised $225m at a valuation of $3.8bn.

Snapchat's growth has been meteoric. The app launched for Apple's iPhone in July 2011 as a way for people to send photos to friends that self-deleted after being viewed for a set period of time, alerting the sender if the recipient tried to capture a screenshot.

The app launched for Android smartphones in October 2012, and by June 2013 had more than 5m daily active users sending 200m photos and videos every day. Since then, the latter figure has increased to more than 350m.

Research published today by the Pew Research Center claims that 9% of all US mobile phone owners are using Snapchat, but that this percentage rises to 26% for 18- to 29-year-olds, reflecting its young demographic.

As a comparison, Pew says that Facebook's Instagram app is now used by 18% of US mobile phone owners, and 43% of 18- to 29-year-olds. Instagram was acquired by Facebook for $1bn in 2012, but reports over the weekend suggest Facebook may have since made overtures to Snapchat too.

The Wall Street Journal claims that Facebook chief executive Mark Zuckerberg approached Snapchat "to discuss an acquisition above $1bn" but was "rebuffed" by its CEO Evan Spiegel. In late 2012, Facebook launched a direct competitor to Snapchat called Poke, but it did not take off.

Snapchat does not currently sell advertising or charge its users to use the app, and while it's almost certain to remain free, Spiegel has talked publicly about his ambitions to add in-app purchases for additional features.

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