Yahoo prepares to invest in Snapchat and buy MessageMe

Yahoo! is close to investing in Snapchat in a funding round that values the start-up at $10 billion (€8 billion), according to a person with knowledge of the situation.

Yahoo is the lead investor in the financing and set the terms of the round, said the person, who asked not to be identified. Venture capital firm Kleiner Perkins Caufield and Byers has also invested as part of the Snapchat funding, people with knowledge of the matter said.

Yahoo separately also agreed to buy mobile-chat platform MessageMe. The deal was for less than $12 million, said people familiar with the situation. The moves continue an acquisition and investment tear that Yahoo has embarked on under chief executive Marissa Mayer, who is trying to turn around the Sunnyvale, California-based web portal.

Increasing pressure

Yahoo is working to build up its offerings in areas such as mobile and messaging that are attracting many new users. The company is under increasing pressure to reveal how it plans to shore up its core online advertising business, with activist investor

Starboard Value

LP last month pushing Yahoo to stop making acquisitions and to consider breaking up or combining with AOL.

Snapchat, a Los Angeles-based company that makes a mobile application for sending disappearing photo messages, is part of an elite group of technology start-ups that are commanding valuations in the 11-digit range, amid a financing boom in Silicon Valley. Other closely held companies that are valued at $10 billion or more include house-sharing app Airbnb and file-sharing company Dropbox. In June, car-booking app Uber Technologies. raised $1.2 billion at a valuation of $17 billion.–(Bloomberg)