SnapChat is getting funded. By Instagram backer Benchmark
Yesterday, Dan Primack pointed out that like Fred Wilson of Union Square Ventures, Matt Cohler, who backed Instagram for Benchmark Capital, hasn't done a deal in 2012. Well, that is all set to change, for Benchmark is very likely …
Context & Ripple Effects
The round is still unconfirmed — the reporting traces to Dan Primack's observation that Benchmark's Matt Cohler, who backed Instagram for the firm, had gone all of 2012 without a deal, much like Union Square Ventures' Fred Wilson. TechCrunch's sourcing puts the terms at north of $10M at around a $70M valuation, led by partner Mitch Lasky rather than Cohler.
The backdrop is a consumer photo-and-video app market already flush with angel money: Socialcam raised an A-list angel round from Yuri Milner, Tim Draper and Laurene Powell Jobs back in April 2012. A Benchmark-led Series A for Snapchat would mark the first top-tier institutional validation of ephemeral messaging, not just another angel check.
First-order effects
- Benchmark ends its 2012 consumer drought with a stake in one of mobile's fastest-growing apps, while Snapchat gains institutional capital and a seasoned board-level backer at a reported ~$70M valuation.
- Mitch Lasky, not Cohler, takes the lead seat — meaning Benchmark is betting on gaming/consumer pattern-matching rather than simply replicating its Instagram playbook.
Second-order effects
- Other blue-chip firms that sat out 2012 consumer deals — Union Square Ventures' Fred Wilson was named alongside Cohler in the same observation — face pressure to find their own breakout mobile property before valuations climb further.
- Rival ephemeral and photo-sharing apps now have a priced comparable: a ~$70M mark for a pre-revenue messaging app resets what founders in the category can ask angels and seed funds.
Third-order effects
- If the pattern holds, top-tier VC returns to consumer mobile by underwriting engagement metrics instead of revenue — the Instagram exit remains the template Cohler proved, and every fast-growing photo app becomes a candidate for the same thesis.
- A successful Benchmark-Snapchat pairing would reinforce the two-tier financing structure in consumer apps: celebrity angels at inception, franchise firms at the first institutional round.
The trend: Top-tier venture capital is re-entering consumer mobile through pre-revenue photo and messaging apps, pricing rounds on growth rather than revenue.