Snapchat Inc. has closed an investment from Yahoo! Inc. and is continuing to raise more money, according to people with knowledge of the matter.
Snapchat, which makes a mobile application for sending disappearing photos, recently completed a funding with Yahoo in a deal that values the startup at $10 billion, said the people, who asked not to be identified because the details are private. The financing round remains open, with Snapchat seeking money from other investors, said the people, who declined to comment on how much Yahoo invested.
The Los Angeles-based startup, which earlier held funding talks with Alibaba Group Holding Ltd., also signed up venture capital firm Kleiner Perkins Caufield & Byers in the round this summer, people familiar with the situation have said.
Snapchat is raising more money as the company works to increase its number of users and become a real business. Chief Executive Officer Evan Spiegel last year turned down a $3 billion acquisition offer from Facebook Inc. in order to build Snapchat into a large, independent company. Over the weekend, the startup began showing advertisements, marking its first significant step toward revenue. Users send more than 700 million disappearing “snaps” a day and more than 500 million stories are viewed daily, the company has said.
Mary Ritti, a spokeswoman for Snapchat, declined to comment, as did Sarah Meron, a spokeswoman for Yahoo.
Snapchat is part of an elite group of technology startups now commanding eleven-digit valuations, amid a financing boom for closely held companies. Others in that camp include house-sharing app Airbnb Inc., file-sharing company Dropbox Inc. and car-booking app Uber Technologies Inc.
Earlier this month, Spiegel appeared at the Vanity Fair New Establishment Summit in San Francisco, where he discussed Snapchat’s ad effort and how the promotions would be built around “telling a story.”
Snapchat, born in 2011 in Spiegel’s fraternity house, previously raised funding from investors including Institutional Venture Partners, General Catalyst, Benchmark, Lightspeed Venture Partners, and SV Angel.