Several prominent Tiger Cubs and other high-profile hedge fund managers have participated in Snapchat’s new $1.8 billion Series F round of financing.
Snapchat is the photo-messaging application company founded by two Stanford University students who spurned a $3 billion acquisition offer from Facebook several years ago. TechCrunch estimates that after the latest financing, the company is now valued at between $17.8 billion and $20 billion. The $1.8 billion figure was disclosed last week in a regulatory filing.
Investors believe younger users are moving away from Facebook and toward social media companies like Snapchat and Instagram, which they believe are doing a better job of monetizing their platforms than they did in the past.
The hedge fund investors who participated in Snapchat’s latest financing round include Glade Brook Capital Partners, which we have reported several times in the past has already made major commitments to the social media company. Other investors include Stephen Mandel Jr.’s Lone Pine Capital, Philippe Laffont’s Coatue Management and James (Jamie) Dinan’s York Capital Management. Of course, Facebook remains the most widely held hedge fund stock as of the end of the first quarter.
Mandel’s involvement is especially intriguing. Unlike other Tiger Cubs, he has made virtually no private investments over the years. The one major exception is for ride-sharing giant Uber Technologies. In late 2014 the Greenwich, Connecticut–based Lone Pine Capital, along with Glade Brook and Valiant Capital Management, another Tiger Management descendant, participated in Uber’s $1.2 billion Series E financing.
Lone Pine has three long-short hedge funds and one long-only fund. In the firm’s fourth-quarter 2014 letter to clients, Mandel and several colleagues railed at the large sums of money flowing into private companies at the time. “With interest rates at multi-decade lows, equities markets having enjoyed a powerful rally from the 2009 bottom through year-end 2014, and private technology companies receiving eye-popping valuations, does this not signal an extended equities market with limited opportunity?” they wrote.
Several other investors in Snapchat operate separate funds devoted to private companies.
Last year Glade Brook launched the Glade Brook Private Opportunities Fund, designed to invest in four to six private “big global ideas,” according to its offering document. We earlier reported the fund made significant investments in Uber and Snapchat.
Earlier this month Glade Brook created a new fund — Glade Brook Private Investors VIII — designed for the firm’s private arm to participate in the latest financing for Snapchat. As we previously noted, Glade Brook has been slowly transitioning from being mostly a hedge fund firm to a predominantly private equity/venture capital operation. At year-end Glade Brook had about $1.1 billion under management, which included $310 million in its public equity vehicles and $775 million in private equity.
This is also not Coatue’s first foray into Snapchat. In 2013 the New York firm invested $50 million in the company.
In addition to its hedge funds and long-only fund, Coatue runs two funds dedicated to investing in private companies. They include Coatue Hybrid Fund I, launched in 2013 and headed at the time by Laffont’s brother, Thomas, and Coatue Private Fund II, launched in 2015.
York, which does not have a connection to Tiger, also invested in Snapchat. It is not clear which vehicle it used to take this position.
