Yahoo to invest millions in Snapchat app

Yahoo plans to invest millions of dollars in mobile application, Snapchat, using profit sourced from Alibaba sale.

Yahoo’s co-founder, Jerry Yang, sold part of his 40% stake in e-commerce site, Alibaba, during last month’s initial public offering. The move earned Yang around $9bn profit before tax.

Yahoo is set to invest around $20m in Snapchat’s next funding round, according to The Wall Street Journal.

Snapchat is a mobile application that allows users to send images and videos to one another that disappear moments after being viewed. The app was created in 2011 by a group of students at Stanford University and quickly became popular among teens and young adults.

Other sources have reported that the offer made by Yahoo would value the app at around $10bn. Snapchat, run by co-founder and chief executive Evan Speigel, had previously rejected a $3bn takeover from Facebook among other tech giants.

Yahoo has also reportedly made the acquisition of another mobile messaging app, MessageMe, in the last week. The app allows individuals or groups to people to message one another using stickers and emoticons.

Yahoo’s funding plans would make Snapchat one of the most highly valued start-ups in history to have not yet made any revenue.