SAN DIEGO, CALIF. (TheStreet) -- In 2014 alone, Whisper, Secret, and Yik Yak, three young smartphone apps for exposing your private thoughts anonymously, have collectively raised more than $80 million. It's a staggering figure for such a high-risk market and the hype is dividing the venture community into believers and skeptics, but those forking over the cash are caught up in the novelty of it, betting this is the next iteration of social networking.
"Just like regular stock investors, VCs are known to chase," Howard Lindzon, CEO of online trader community StockTwits and active angel investor, said of investing in anonymous social apps. "VCs chase metrics. They all look at the same numbers, buy the same data, and see the same exploding metrics." TheStreet is a content partner with StockTwits.
The metrics, according to mostly anecdotal stories from the companies and their investors, seem to suggest that young smartphone users who download Yik Yak, Whisper, or Secret become immediate addicts. Whisper, a mobile confessional app, says users return eight to ten times per day and spend around 30 minutes with the app on a daily basis.
The thrill of the chase -- and more so the catch of the next billion-dollar-plus exit -- is proving so titillating that a bevy of respected venture firms including Lightspeed, Sequoia, Index, Redpoint, and SV Angel, are feverishly buying their way in to the anonymous market and doing so at a pretty premium.
San Francisco-based Secret, which is less than a year old, received a $100 million valuation after its latest funding round, which netted it $25 million in a Series B funding round. For context, it took Facebook (FB) a little more than a year to arrive at a $100 million valuation.
Secret's substantial capital infusion raises the question as to whether investors truly believe that the future of social networking will look more like the identity-free past. The Facebook comparison is no coincidence. Redpoint Partner Ryan Sarver, who led the firm's investment in Secret, told TheStreet that he believes Secret, which pulls contacts from your phone's address-book, and sometimes offers juicy or revealing blind items, can grow to rival the largest social apps for time and attention. "Secret has the opportunity to be the next major social platform," he said.
Two-year-old Whisper, thought to be the largest of the three apps in terms of audience, has raised $60 million in its short life span. The Los Angeles-based company made an early believer out Lightspeed Partner Jeremy Liew, who also led Snapchat's first round of funding. He's particularly fond of Whisper for its ability to hook people for half an hour every day, behavior he says is indicative that youngsters are putting the app on the all-important home screen of their devices.
By comparison, Facebook CEO Mark Zuckerberg said on the company's second quarter earnings call U.S. users spend "40 minutes each day using our service, including about one in five minutes on mobile."
Liew called Whisper's engagement and retention rates "amazing" and "extraordinary," echoing the sentiment of Sarver, who said that Secret's engagement levels and the depth of conversations on the app are something he's never seen before.
Read More: Snapchat: A Race For Retinas, Not Revenue