A loss-making photo messaging company has been valued at almost £13billion, fuelling fears of another technology bubble.

Snapchat, which lets users send photos that delete themselves after a matter of seconds, raised more than £300million on New Year’s Eve from a host of investors.

Because it is not listed on a stock market, the US company only has to provide limited details of the transaction.

The next bubble? A loss-making photo messaging company has been valued at almost £13billion, fuelling fears of another technology bubble

But it was estimated that the latest round of fundraising valued the company at up to £12.8billion – almost twice the value of Marks & Spencer.

Snapchat is one of a number of tech firms that has seen phenomenal growth in the number of people who have signed up to it, but continues to make losses because its services are free.

More than 700million photos are sent over its network a day, and it has more than 200million registered users across the world.

But not only does the company not make a profit – it currently doesn’t have any revenues, and is estimated to be burning through cash at a rate of £20million a year.

As well as funding research and paying its staff, the company is also reported to be spending £2million a month on legal fees because it is involved in a number of lawsuits. Technology companies often lure in early backers with the promise of bumper returns in future.

Apple’s stock market listing in 1980 created the largest number of millionaires ever in a single day.

Warning the market: Facebook sparked concerns over another bubble last year when it bought international messaging service WhatsApp for £11.4billion

When Facebook listed on Wall Street’s Nasdaq stock market in 2012, early backers who had put money into the company received vast wealth – including the decorator who painted the company’s office in 2005 but asked to be paid in shares and subsequently saw his stake valued at £130million.

Fast-growing tech groups with an eye-catching user base often raise money periodically as they need it from venture capital firms or other companies.

Snapchat has raised money over the last year in several tranches – but its New Year’s Eve deal was the largest recorded so far.

Search group Yahoo is said to be one of Snapchat’s investors as is Chinese internet giant Alibaba. The company has previously turned down takeover advances from both Google and Facebook.

Facebook sparked concerns over another bubble last year when it bought international messaging service WhatsApp for £11.4billion.