Yahoo is close to investing in Snapchat in a funding round that values the startup at US$10 billion, according to a person with knowledge of the situation.
Yahoo is the lead investor in the financing and set the terms of the round, said the person, who asked not to be identified because the information is private. Venture capital firm Kleiner Perkins Caufield & Byers has also invested as part of the Snapchat funding, people with knowledge of the matter have said.
Yahoo separately also agreed to buy mobile-chat platform MessageMe. The deal was for less than $12 million, said people familiar with the situation.
The moves continue an acquisition and investment tear that Yahoo has embarked on under chief executive Marissa Mayer, who is trying to turn around the web portal. Yahoo is working to build up its offerings in areas such as mobile and messaging that are attracting many new users. The company is under increasing pressure to reveal how it plans to shore up its core online advertising business, with activist investor Starboard Value last month pushing Yahoo to stop making acquisitions and to consider breaking itself up or combining with AOL.
Snapchat, a Los Angeles-based company that makes a mobile application for sending disappearing photo messages, is part of an elite group of technology startups that are now commanding valuations in the eleven-digit range, amid a financing boom in Silicon Valley. Other closely held companies that are valued at $10bn or more include house-sharing app Airbnb and file-sharing company Dropbox. In June, car-booking app Uber Technologies raised $1.2bn at a valuation of $17bn.
A Yahoo representative declined to comment on Snapchat, as did Christina Lee, a spokeswoman for Kleiner Perkins. Mary Ritti, a spokeswoman for Snapchat, did not respond to a request for comment. The Wall Street Journal on Friday reported Yahoo was nearing an investment in Snapchat and TechCrunch earlier reported the MessageMe deal.
In a statement about MessageMe, Yahoo said the company is “excited to welcome the eight MessageMe employees to the Yahoo team.”
Follow The National's Business section on Twitter
