Snapchat raises $13.5M, users sharing 60M photos per day
Fast-growing photo sharing application Snapchat has completed a Series A venture funding round totaling $13.5 million, led by Benchmark Capital. The New York Times reports the investment values Snapchat between $60 million and $70 million.
Snapchat--introduced for Apple's (NASDAQ:AAPL) iOS in September 2011 and ported to Google's (NASDAQ:GOOG) Android last fall--enables users to capture photos (a.k.a. "snaps") with their smartphone, overlay a text message and transmit the image to friends. The photo is available to the recipient for a pre-determined viewing period between just one and 10 seconds, and then it is permanently deleted from both smartphones and from Snapchat's servers. Nielsen reports that Snapchat attracted 3.4 million unique users in December 2012, doubling month over month, and The New York Times notes users are now sharing more than 60 million photos per day.
Although Snapchat has earned a reputation as a tool for sending explicit photos, co-founders Evan Spiegel and Bobby Murphy contend the service supports many different kinds of interactions. "You can't build a business off sexting," Spiegel said. "It's such a specific-use case. This is about much more than that."
The Snapchat app is a free download, and Spiegel and Murphy have not yet taken steps toward monetizing the service. Some insiders anticipate Snapchat could generate revenue by allowing advertisers to send coupons or fashion tips.
Snapchat's rise poses a threat to the established social media hierarchy: The overwhelming majority of users are between the ages of 13 and 25, a demographic that appears to be losing interest in Facebook (NASDAQ:FB). In its recent 10-K annual report, Facebook acknowledged "We believe that some of our users, particularly our younger users, are aware of and actively engaging with other products and services similar to, or as a substitute for, Facebook. For example, we believe that some of our users have reduced their engagement with Facebook in favor of increased engagement with other products and services such as Instagram." (Facebook acquired Instagram in 2012.)
Late last year, Facebook introduced Poke, a photo sharing app very similar to Snapchat. Poke quickly topped the App Store Free Apps download rankings but has since fallen out of the Top 200; at press time, Snapchat is number 21, three spots behind Instagram.
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