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New funding raises Snapchat valuation to $18bn

News: The valuation follows funding of $1.81bn from venture capital firms.

By CBR Staff Writer

Snapchat has recently secured $1.8bn in funding, increasing its valuation to $18bn.

The startup received this round of funding from Sequoria Capital, Spark Capital, Meritech Capital Partners and Dragoneer Investment Group.

This valuation is higher than the previous valuation of Snapchat given by its investors in March 2015, which was about $16bn.

Previously, Snapchat had received $175m funding from Fidelity Investments for an overall valuation of $16bn.

Shares of Snapchat were bought by the investors for about $30.72 per share. Experts say that the venture capital firms Sequoria and Spark are reluctant to invest in tech companies.

Reportedly, even Chinese company Alibaba also wanted to invest about $200m in Snapchat, after its $16bn valuation last year.

These companies are said to be investing in Snapchat as many investors believe the app firm has the potential to overtake other social media giants such as Facebook and Twitter.

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Despite the value of the company Snapchat only earned revenues of $59m in 2015. The investors, however, are confident that with this round of funding, this year’s revenues might increase to $250-300m.

At present, Snapchat has over 100 million active users out of which 60% of them are aged between 14- 23 years of age.

The firm now plans to make changes to the user interface of the app, sources told. The changes include the use of a rectangular design instead of circular design, which will provide more space for advertisers.

It could also make changes to its Discover feature, a space dedicated for media giants to attract teenagers.

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