Snapchat-flashy-featuresYahoo Inc. is planing to reinvest a small portion of the cash it made from an early bet on Alibaba Group Holding Ltd. BABA +1.19% in another fast-growing startup: Snapchat Inc.

Sources familiar with the Internet portal say Yahoo is investing about $20 million.

The mobile-messaging startup has been working to secure capital from a mix of venture-capital firms, money managers and companies.

Yahoo may be looking to repeat its success investing in Alibaba, though at a much smaller scale.

Yahoo paid $1 billion for a 40% stake in the Chinese e-commerce company in 2005, an investment that has yielded a stake worth tens of billions of dollars and helped CEO Marissa Mayer buy time with shareholders while she attempts to turn around the struggling core business.

Snapchat could become an important strategic partner for Yahoo, as it seeks new ways to distribute its content, apps and ads in the mobile world.

The move by a large tech company to back an up-and-coming startup at a lofty valuation resembles Microsoft Corp’s 2007 investment in Facebook Inc., The software giant beat out Google Inc. to make that investment, which multiplied in value and led to Microsoft’s strategic partnership with Facebook around its Bing search engine.

Yahoo is one of many potential investors that have held talks with Snapchat as the young company puts together a round of funding that would make it one of the world’s most valuable startups.

Via WSJ