TIME Tech

Reports Say Snapchat Is Valued at Roughly $10 Billion

FRANCE-US-IT-INTERNET-SECURITY-SNAPCHAT
Lionel Bonaventure—AFP/Getty Images

If reports are true, this represents an enormous valuation for a company that has effectively no revenue source

Multiple news outlets are reporting that Snapchat is raising funds from investors based on a $10 billion valuation for the disappearing-messaging service.

The Wall Street Journal, citing unnamed sources, reports that the venture-capital firm Kleiner Perkins Caufield & Byers agreed to invest in the app maker at a valuation of nearly $10 billion. Bloomberg News, also citing unnamed sources, reports that the startup is in talks for a round of financing at a $10 billion value. TechCrunch is reporting a similar figure.

The valuation could not be confirmed by TIME and does not suggest that any single buyer intends to pay that amount. The company uses the valuation to determine the share of ownership it gives investors.

But if true, $10 billion would represent an enormous valuation for a company that has effectively no revenue source. The Snapchat app, which does not have ads, is the third most popular app among millennials after Facebook and Instagram, according to Bloomberg, and marketers see potential in using the app to reach out to millions of the coveted young-people demographic.

The Los Angeles–based tech firm was valued at $2 billion just one year ago, according to the Journal, and its owners reportedly turned down a $3 billion offer from Facebook last November.

“The valuation of our business and our capital requirements are the least exciting aspects of supporting the Snapchat community. We have no further comment at this time,” an unnamed spokesperson for Snapchat told the Journal. A spokesperson for Kleiner declined to comment to the Journal.

TIME Innovation

Five Best Ideas of the Day: August 4

1. Making the punishment fit the crime: A better way of calculating fines for the bad acts of big banks.

By Cathy O’Neill in Mathbabe

2. Lessons we can share: How three African countries made incredible progress in the fight against AIDS.

By Tina Rosenberg in the New York Times

3. Creative artists are turning to big data for inspiration — and a new window on our world.

By Charlie McCann in Prospect

4. We must give the sharing economy an opportunity to show its real potential.

By R.J. Lehmann in Reason

5. Technology investing has a gender problem, and it’s holding back innovation.

By Issie Lapowsky in Wired

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Venture Capital

Ride-Sharing Firm Lyft Raises $250 Million, Eyes NYC Expansion

Lyft Car
A Lyft customer gets into a car on January 21, 2014 in San Francisco, California. Justin Sullivan—Getty Images

Lyft is facing resistance from entrenched transportation interests in cities around the country

Lyft, the fast-growing, pink-mustachioed San Francisco-based car-sharing service, has raised $250 million in a new round of venture capital funding, the company announced Wednesday. Lyft will use the cash infusion to continue to grow domestically and expand internationally, company co-founder John Zimmer told TIME in an interview.

The new round of funding which was led by New York-based investment firm Coatue Management and joined by Alibaba, the Chinese e-commerce giant. Existing investors Andreessen Horowitz, Founders Fund and Mayfield also participated in the latest round, which brings Lyft’s total venture capital funding to $333 million. Zimmer declined to comment on Lyft’s latest valuation, but a recent report said the company is now worth more than $700 million.

Lyft is a mobile-phone application — available on Apple’s iPhone and Google’s Android devices — that allows riders to “order” a driver to their location in minutes. Since its launch in August of 2012, Lyft’s community of drivers and riders has exploded in popularity. The company, which now has 240 employees, has facilitated over one million rides, Zimmer said, and this week launched in Tampa and Tucson. The service is now available in 30 cities nationwide.

(MORE: Lyft Hits the Gas Pedal in San Francisco)

“It was important for us in this round to ensure that capital would not be a constraint in growing the community,” Zimmer said. “We’re seeing more and more cities saying this is a great way to help build public transportation very quickly.” Zimmer said the company is not planning an initial public offering at this time, but rather is focused on its domestic and international expansion.

The new funding comes as the ride-sharing market is booming, with upstart firms like Lyft, Uber and Sidecar using smart phone technology to provide alternatives to traditional transportation options like taxicabs and rental cars. These services are examples of the emerging “peer-to-peer” economy — which includes Airbnb for lodging and TaskRabbit for everyday chores — in which people connect online to exchange services and get things done.

Lyft’s drivers are regular people with cars who want to make a few bucks by giving someone a ride. All drivers are subjected to DMV and criminal-background checks and are required to undergo in-person interviews, vehicle inspections and a two-hour training session.

Like its rivals Uber and Sidecar, Lyft continues to face legal and regulatory headaches, driven in part by entrenched commercial transportation interests. “Existing industries are really trying to put a stop to this new innovation,” Zimmer said. Several states are considering legislation to regulate companies like Lyft, Uber and Sidecar, and San Antonio police recently sent Lyft a cease-and-desist order, saying the service violates a local ordinance. The city’s police chief says Lyft drivers risk arrest.

Zimmer said Lyft has plans to expand into New York City in the near future, where the company will no doubt face stiff resistance from the taxi industry. “It’s a massive opportunity in a really large market that’s unique from a transportation alternatives perspective,” he said. “There’s a really entrenched existing industry with a lot of money tied up in the medallion system. But this is the year for Lyft in New York.”

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