Snapchat has reportedly gained $80 million funding from Institutional Venture Partners in their second round, with an $800 million valuation for the photo snap sharing app.
While this is still in speculation, it was widely known Snapchat needed their next round of funding, with the private startup not making a lot of revenue and losing money paying staff, maintaining the app and keeping servers up.
Snapchat currently processes about 150 million photos per day and even though the numbers have not been released we suspect Snapchat has around 10 million active users.
It is a little odd to put an $800 million valuation on Snapchat, especially considering it makes hardly any revenue and the design of the app makes it hard for relevant advertising.
Since photos are deleted after a few seconds, the photos cannot be analysed and optimised for advertisement, as Instagram, Facebook and Twitter may be able to do in the near future.
Snapchat could go through the traditional route of just slapping ads on the app, although with the budding startup trying to draw a large collection of teenagers to the service, we doubt they will try to alienate their audience with ads.
We believe Snapchat is cooking up some more clever advertising techniques, the co-founders said at the D conference they are working on monetization solutions for the app.
Tumblr suffers from the same problem, as does Instagram and Path, all these startups lack decisive revenue routes. This is probably why Snapchat is likely to go the way of the other $1 billion acquisitions, because they cannot keep seed funding without results.
Source: TechCrunch
