Tech

Snapchat raising $100 million and hiring sales team ahead of monetizing service

By Michael Mayday , Jun 09, 2013 06:44 PM EDT
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Snapchat, the application which lets users send temporary text messages, pictures, and videos before being deleted after a specified period of time, is finishing a financing round aiming to net the service $100 million in new funds.

The service itself, according to multiple reports, is looking for a valuation - an estimation of a company's worth - of anywhere between $500 million to $1 billion.

Why so much? As Om Malik, founder of GigaOm, notes, the company is one of the first to pioneer social sharing purely for mobile systems. Facebook and other social platforms are typically built for the web first and mobile second. This difference, and five million active daily users, gives Snapchat a distinct advantage.

And where the company is raising its $100 million is unusual for a tech company. According to Malik, the company may be chasing after hedge funds, rather than traditional Silicon Valley venture capitalists.

The question of monteization, and paying back its investors, remains. The company hasn't offered any details on how it would make money off of the service, but, according to TechCrunch, it does have a few plans in the works. A plan which, apparently, includes an army of salespeople.

The application has often touted the temporary life of messages sent over the service as a way for users to send fun and goofy messages. But not everything is all fun and games in the world of Snapchat. The service has recently come under fire by parental organizations for enabling teenagers to send sexually suggestive photos of themselves, though CEO Evan Spiegel has said the service typically isn't used in this manner.

Regardless, photos and messages sent over Snapchat aren't necessarily temporary. Users can take a screenshot of any photo sent to them (though the sender is notified of this), or user can take photos of their screen with another camera. Finally, a Utah-based forensics researcher found that the service doesn't actually delete sent files, and, in fact, actively stores images on a user's phone. Accessing these photos is no easy task and requires a good deal of training, but it is possible for anyone with $300 to $500 to spare.

Snapchat released a new version of its iOS application on Wednesday, June 5. The update included new profiles and swipe navigation, among other things. Swipe navigation, in particular, will help users to access their camera, inbox, and friends list quickly. The update also allows users to send snaps to friends from their address book and lets users quickly respond to a message with a double-tap.

The Android version of Snapchat hasn't been updated yet, and there is currently no release date for an update on Google's mobile OS.

According to PC Mag, Snapchat users are sending over 150 million messages through the service everyday.

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