The deal sneaked into the news cycle over the weekend and caught wildfire yesterday, but both companies are keeping the details under wraps. It also comes with pressure on Snapchat to increase its revenues.
Fortune Magazine reported Tuesday that Snapchat is planning to buy the popular icon and emoji comic maker Bitstrips for around $100 million. There has been no official word from either company yet about an acquisition.
Fortune approached both companies about the deal, though neither was inclined to comment.
Bitstrips raised $15 million in February 2014 from the likes of Horizon Ventures and Kleiner Perkins Caufield & Byers, though some sources mark it down to $11 million.
It’s a massive deal for the Toronto-based company, which became wildly popular with Facebook users who could quickly animate humorous stories about their lives, family, and friends. Most everyone on Facebook would recognize the signature animation style of the strips, as the characters they generate often find themselves into people’s Facebook profile photos.
While they are hardly the first to let Snapchatters and Facebookers create cartoons of themselves with different skin tone options, hair styles, accessories and the like, those avatars have taken off over the last couple of years since their relaunch in October 2013.
Snapchat hasn’t been crazy about spending money to buy out the competition or to augment its platform with features by other companies. They last bought Ukrainian startup Looksery for $150 million in September 2015. Before that, they announced deals for Scan ($50 million) and Vergence Labs ($15 million) in December 2014. The company itself is still raises venture capital at a colossal valuation of $16 billion, announcing $175 million in Series F back on March 3 led by Fidelity Investments. Snapchat recently entered into a partnership with Viacom to increase their advertising capabilities.
This acquisition could be a part of that grand strategy. Bitstrips has taken part in mass marketing campaigns, including for recent box office anticippointment Batman v Superman: Dawn of Justice.
“I can’t even tell you what our inbox looks like in terms of partnership requests,” Bitstrips CEO Jacob Blackstock told Forbes’ Alyson Krueger in an interview published March 24 (whether Forbes had caught wind of the acquisition or just had incredibly fortunate timing is unclear). “All of the movies, all the television shows, all the fashion houses, all the pop stars, they all want to be Bitmojis because we somehow became the determinant of who has made it.”
That Snapchat’s evaluation hasn’t changed since last year shouldn’t be surprising since there is concern about overvaluation throughout the startup world. The back-and-forth, you’re-hot-and-you’re-cold approach by Fidelity Investments might indicate some degree of dissatisfaction with the social media giant.
Fidelity cut back 25% of its equity in the company last year, though it added back 15% before we entered 2016.
The Viacom deal in February might have been the green light Fidelity needed to put more money into the company with the Series F round.
It remains to be seen how Snapchat will use Bitstrips as the details of the deal remain elusive and both companies refuse to confirm it. But there is no denying that Snapchat is betting big for its investors.