Source: Snapchat Snaps Up $80M From IVP At An $800M Valuation
It's the second day of summer, and Snapchat has raised an $80 million Series B round at an $800 million pre-money valuation, according to a source. The phat Series B round was led by Institutional Venture Partners …
Context & Ripple Effects
Two weeks before this report, Snapchat was said to be seeking around $100 million at a near-$1 billion valuation; the round TechCrunch's source describes on June 23, 2013 — $80 million led by Institutional Venture Partners at $800 million pre-money — came in under that ask. Notably, the lead went to IVP rather than Benchmark Capital, whose involvement had been rumored as far back as December 2012 but never confirmed.
The timing matters because Snapchat had just been confirmed to be aggressively recruiting sales staff out of Stanford and USC ahead of its monetization debut, with no revenue yet attached to an app that was already handling more than 60 million photos and messages a day as of February. Business Insider picked up the story twice the same day, signaling how closely the market was watching whether ephemeral messaging could be turned into a business.
First-order effects
- Snapchat gains $80 million to convert its confirmed Stanford and USC sales hires into an actual go-to-market operation, giving its monetization debut a funded runway before any revenue exists.
- Institutional Venture Partners takes the lead slot at $800 million pre-money — a price point below the near-$1 billion valuation Snapchat was reportedly shopping in early June, suggesting some negotiation pressure on the company's side.
Second-order effects
- Rival messaging apps now face a funded ephemeral-messaging competitor with dedicated sales staff, forcing each of them to arrive at their own next raise with a concrete answer to how they will make money.
- A late-stage firm paying $800 million for a pre-revenue consumer app gives every founder in the category a fresh comparable to cite in term-sheet negotiations, pushing engagement-stage valuations upward across the board.
Third-order effects
- If rounds keep clearing on usage metrics like Snapchat's 60-million-plus daily volume rather than revenue, private-market prices decouple further from fundamental value, widening the gap between paper valuations and whatever public markets will eventually pay.
- Consumer social drifts toward a structure where only heavily capitalized platforms survive long enough to test advertising models — making the outcome of Snapchat's first sales-led monetization push a template for the entire category.
The trend: Consumer messaging apps are commanding ever-larger rounds priced on engagement instead of revenue, with late-stage institutional money like IVP increasingly setting the clearing price.