Snapchat founders reportedly pocket $20M from funding deal
College-age co-founders Evan Spiegel and Bobby Murphy are said to have netted $10 million a piece from a secondary offering.
Rumor has it that Snapchat is such a hot commodity that co-founders Evan Spiegel, 22, and Bobby Murphy, 24, were able to negotiate a cool $20 million just for themselves.
Two-year-old Snapchat offers an iOS and Android app for sending friends photos and videos that disappear in seconds. The company, which does not report user numbers, has become a hit with youngsters -- and even adults -- who exchange more than 200 million "snaps" every day.
The Los Angeles-based Snapchat announced Monday that it raised $60 million in funding, but new reports suggest that the company completed a secondary offering for an additional $20 million, bringing the total raise to $80 million. Citing a source familiar with the funding, Valleywag reported that Spiegel and Murphy each received $10 million through the separate, yet-to-be-disclosed offering. TechCrunch said it too heard that Snapchat raised $20 million more through a secondary offering.
In secondary offerings, which are not atypical for startups in hot demand, founders are able to take cash off the table by selling some of their shares to investors. These types of deals usually provide liquidity to founders who won't see an immediate cash return from their holdings.
Dennis Phelps, general partner at Institutional Venture Partners, which led Snapchat's big funding round, said the financing was "intensely competitive -- one of the most competitive financings we have been a part of in years." Phelps added that one of reasons IVP invested was "because they let us." The statement hints that the firm could have beat out others by sweetening the deal with the rumored secondary arrangement.
Snapchat could not be reached for comment.