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updated: 7/30/2014 10:33 AM

Snapchat said in funding talks with Aalibaba at $10 billion

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Bloomberg News

Snapchat Inc., the company that makes a mobile application for disappearing photo messages, is in talks with investors including Alibaba Group Holding Ltd. for a round of financing that may value the company at $10 billion, people with knowledge of the situation said.

The talks are ongoing and the terms of the funding may change, said one of the people, who asked not to be identified because the talks are private.

Snapchat's popularity has continued to grow, with people sending more than 700 million disappearing "snaps" a day and more than 500 million stories viewed daily, the company has said. It now competes with Facebook Inc., which tried to buy Snapchat for $3 billion last year and started its own product to send ephemeral photos and videos after being rebuffed.

Snapchat said in May it was adding an option for users to chat with text, joining an increasingly crowded mobile-messaging market that also attracted Facebook. The social network agreed to pay about $19 billion for WhatsApp Inc. in February.

Tech Startups

Jim Wilkinson, a spokesman for Alibaba, declined to comment, as did Mary Ritti, a spokeswoman for Venice, California-based Snapchat.

Technology companies including house-sharing app Airbnb Inc. and file-sharing company DropBox Inc. have both recently raised money at $10 billion valuations. In June, car-booking app Uber Technolgies Inc. raised $1.2 billion at a record-breaking valuation of $17 billion.

Alibaba, China's biggest e-commerce company is building a presence in the U.S. as it prepares to go public with a listing on the New York Stock Exchange this year, in what could be the biggest IPO in U.S. history.

Last year, Alibaba started a U.S.-based fund to invest in e-commerce and emerging technologies, led by Michael Zeisser, who previously led Liberty Media Corp.'s Internet strategy.

In April, the Hangzhou-based company led a $250 million round of financing in ride-sharing app Lyft Inc. In October, it led a $206 million investment in ShopRunner, a subscription- based shipping service for U.S. retailers, as well as a $50 million investment in Quixey Inc., a search engine for mobile apps, and messaging app TangoMe Inc.

Snapchat, born in 2011 in a fraternity house, provides tools that let users easily draw on photos, to put a mustache on a selfie, for example. The images are deleted seconds after they are accessed. The company has already raised more than $100 million of financing from investors including Lightspeed Venture Partners, Benchmark, Institutional Venture Partners, General Catalyst Partners and SV Angel.

Chief Executive Officer Evan Spiegel recently had to apologize for profanity-laced e-mails he sent when he organized Stanford University fraternity parties for Kappa Sigma in 2009 and 2010. He also had to apologize in January for a data breach.

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