Is Pinterest an $11 billion idea?
Investors in Pinterest Inc. seem to think so and are doubling down on the image-bookmarking site to the tune of a $500 million funding round that is expected to bring the five-year-old firm’s valuation to around $11 billion, according to people familiar with the matter.
If successful, that new valuation more than doubles the $5 billion at which Pinterest was valued after its last fundraising round in May of 2014. Why the more than double up?
Pinterest’s potential is the simple answer, particularly as it expands a scrapbooking site into a destination to discover new things. The site saw its user base hit an all-time high in January 2015, up 37 percent from the same time last year. With that expanding base of users, Pinterest is expanding its options for monetizing the site with things like “promoted pins,” a form of advertising that mimics the regular user-generated pins on the site.
Stepping into the increasingly crowded field of social advertising sets Pinterest in direct competition with established social media juggernauts like Facebook Inc., Instagram and Twitter Inc. as well as up and coming services like Snapchat Inc.
Before the new round Pinterest had raised a little more than three-quarters of a billion with a total of $764 million in funding from investors including venture-capital firms Bessemer Venture Partners and Andreessen Horowitz, hedge fund Valiant Capital Partners and Japanese e-commerce firm Rakuten Inc. It is not known if the new round will include new investors or stick with the company’s known investor base.
Pinterest, as of yet, can not be reached for any comments.