Except no one has paid $3 billion for Snapchat. They've only bought a slice at t...

digz · on Dec 9, 2013

I thought the offer from facebook was 3B all-cash for everything?

http://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-bi...

staunch · on Dec 9, 2013

Maybe, but that's a rumor of a failed acquisition attempt. They will almost certainly raise money at that valuation or higher though. Just as soon as their current investors can find some dumb investors to pump the valuation sky high.

http://allthingsd.com/20131029/snapchats-giant-funding-from-...

mrtron · on Dec 9, 2013

Most people own a fraction of their home, and hold a mortgage that is largely backed by the value of the home.

staunch · on Dec 9, 2013

When you buy a house you agree to pay 100% of the agreed upon valuation. Investors in Snapchat are only buying a few percent at this valuation.

This is what it looks like to me:

Step 1) Buy 30% of a company at a $5 million valuation.

Step 2) Buy (or hopefully convince dumber investors to buy) 5% at a $3 billion valuation.

Step 3) Tell Yahoo to acquire you for at least $5 billion since your last raise was at $3 billion and you want your dumb investors to be happy.

Step 4) Cash your billion dollar check.