Move over, Facebook. Pinterest, the social site that lets people “pin” pictures and content to create collections of interest, has become the latest company to be valued at more than $1bn (£630m), following a $100m round of funding.
While estimates of the effective valuation implied by the investment vary between $1bn and $1.5bn, they highlight the fact that Pinterest has already discovered a business model in which it collects an “affiliate” payment on purchases people make via the site.
The new valuation is at least a fivefold leap in value since October 2011, when a previous financing round put it at $200m.
The company has shot to stardom in the past few months to become the 16th most-visited site in the US, according to measurement company Alexa. In April it had more than 20 million users, up from 1 million in July 2011, according to ComScore, another ranking company.
Its traffic soared after August 2011 when it was named one of the 50 best websites of 2011 by Time magazine, and by December it was getting 11m visitors worldwide a week, according to Hitwise.
Now it has received a fresh round of funding led by the Japanese online retailing giant Rakuten, and with particiapnts including its existing investors Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital, and a number of angel investors.
In October 2011 it received a $27m funding round that valued it at $200m. The site only opened for business in March 2010.
Although the company has not disclosed its revenues, they are probably less than $10m according to modelling carried out in March by Rags Srinivasan, a strategic marketing expert. But with user numbers still growing fast, that could be advancing rapidly.
A growing number of brands are using Pinterest to advertise their wares effectively for free, with the aim of driving sales via the displays. That could offer a future means for Pinterest to charge, either for position or visibility.
However, legal experts have queried the site’s liability for copyright lawsuits because it effectively allows the copying of images that are often copyrighted. While some brands may not mind if it drives sales, photographers and commercial organisations could be less pleased.
Rakuten has invested in a number of online retailing companies around the world, including the British retailer Play.com.
“While some may see e-commerce as a straightforward vending machine-like experience, we believe it is a living process where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining,” said Rakuten chief executive Hiroshi Mikitani.
“We see tremendous synergies between Pinterest’s vision and Rakuten’s model for e-commerce.”
[Pinterest boards via hme09c / Flickr]