Alibaba is investing $200 million in Snapchat, a messaging app that allows users to send disappearing photos and is currently banned in China, according to a person at Alibaba who is familiar with the deal.
Key to the deal was Imran Khan, who was hired by Snapchat as Chief Strategy Officer last December, the source said. Khan was formerly head of Asia investment banking at Credit Suisse and was instrumental to executing Alibaba’s massive IPO in the U.S.. He has been credited for raising Credit Suisse’s stature in tech banking.
Alibaba was in talks with Snapchat last year but the rumored investment did not take place ahead of its IPO. A separate source confirmed media reports that the latest round would give Snapchat a $15 billion valuation. The company had previously raised close to $650 million in six rounds of funding and turned down a $3 billion acquisition offer from Facebook. Its investors include
The app allows users to send photos and texts to friends that disappear after a few seconds. It has captured more than 100 million monthly active users but is yet to generate significant revenue. The company’s co-founders, 24-year-old Evan Spiegel and 26-year-old Bobby Murphy, are among the world’s youngest billionaires with a net worth of $1.5 billion each.
With a market cap of over $200 billion and a large amount of cash on hand, Alibaba has been investing heavily overseas, targeting companies that could potentially help expand its e-commerce business and mobile presence. Some of the major deals include a $215 million investment in chat app Tango, and contribution to a $250 million round in ridesharing app Lyft.
Although the exact synergy between Snapchat and Alibaba’s businesses is still unclear, China’s e-commerce giant has been pushing into new markets outside of the mainland. Last year, Alibaba held its annual Single’s Day sale simultaneously in China and abroad for the first time. But traffic on its Tmall Global has remained “a fraction of that on Alibaba’s other marketplaces,” reported the WSJ in December.
Alex Konrad contributed reporting.
