Yik Yak, the controversial anonymous messaging app popular on high school and college campuses, has raised its third round of funding this year. Sequoia Capital led this $62 million capital infusion in the Atlanta-based startup, putting the company’s valuation in the hundreds of millions of dollars.
The investment is yet another sign that investors and users believe social media is more a landscape than a monoculture and that there will not be one messaging app to rule them all. Even though the market might be considered crowded, Yik Yak combines anonymity, ephemerality, and location, which is something no other social service has done.
The funding news has distracted some from a spate of bad press Yik Yak has received because of the site’s current propensity to be used as a vehicle for cyberbullying and slander that recently forced the company’s execs into geo-fencing the app’s use around high school addresses. Cofounder Tyler Droll also says that the app’s users have to be 18 and older to register since high schoolers for the most part have abused it. Last week, after threats were made via the app, one high school was closed and at another, three students were arrested.
Although Yik Yak is not as popular as Facebook or Snapchat yet, the company is now dealing with its own lawsuit surrounding its founding. Less than a week ago, Douglas Warstler, an ex-classmate and fraternity brother of cofounders Stephen Brooks Buffington and Tyler Steven Droll at Furman University, filed a lawsuit alleging that he helped create the app with Buffington and Droll. Furthermore, the duo circumvented his claims to ownership by starting a new company when Warstler refused to sell his shares. The suit states that Droll initiated cutting Warstler out of the company at the behest of his parents.
The other wrinkle worth considering out of the funding announcement is that this is Sequoia Capital’s latest bet on messaging. The firm is rumored to have made more than $3 billion from its $60 million investment in WhatsApp after Facebook acquired the popular service earlier this year. Jim Goetz, the Sequoia partner who was behind the firm’s backing of WhatsApp, is reportedly joining the Yik Yak board.