Everyone’s favorite online discovery site Pinterest has raised yet another round of funding, $200 million from San Francisco firm Valiant Capital Partners, the company confirmed Wednesday. Existing investors, including Andreessen Horowitz, Bessemer Venture Partners and FirstMark Capital also participated. The massive round – twice as much as Pinterest’s last VC infusion of $100 million – values the company at $2.5 billion, according to Pinterest. All for a company that has either yet to figure how to make any money from its 50 million monthly visitors, or just as likely is keeping its mouth shut about its plans.
In the last year Pinterest has exploded. What started out as an invite-only social bookmarking network, where anyone could save a photo and link they found online, has become one of the top 50 websites, according to comScore. In May 2012, the site attracted $100 million at a $1 billion (or $1.5 billion, depending on who you talked to) valuation from Japanese firm Rakuten, leading venture capitalists and the media to hint at the possibility of another bubble set to burst.
It’s spent some of that money on buying recipe aggregator PunchFork in January 2012, and on a new office near San Francisco’s design district. Another chunk of that cash went toward growing the 20-person team to more than 100 employees.
With this new cash, Pinterest is going abroad and buying more companies, says early Pinterest investor Rick Heitzmann of FirstMark Capital. “Pinterest will continue to build out and improve its products; you’ll see more international expansion and there will be additional acquisitions to fit Ben’s (Silbermann) greater vision for the company,” he says. The site is already popular in Europe and Asia, but Pinterest has plans to add more languages and create a more custom experience in other countries.
While $200 million seems over the top for a company that’s not pulling in any revenue, it’s just right, according to Heitzmann. “You always want more than enough capital to execute the vision,” he says. “Pinterest’s vision is to become one of the largest companies in the world for both online and offline discovery, and we want to make sure the company has enough to do that.”
Apparently a lack of revenue isn’t a problem yet. Heitzmann isn’t worried, saying when the time comes Pinterest will find a way to make use of all the content we’re pinning to our board to turn a profit. There’s already been hints of how that might happen. Pinterest started pulling in pricing information when someone pinned a product from an online shop. Pinterest is also immensely valuable to e-commerce retailers because of how much traffic a pin of a dress or coffee mug can send to their sites, and there’s been talk that businesses would be willing to pay for those referrals.
Still, potential avenues for revenue do not equal actual revenue. And while investors championed enterprise startups in the market last year for their clear-cut business models, it seems VCs are still taking their chances on a consumer company with lots of pretty pictures, lots of users and no profits. Either Pinterest’s viral growth is just that impressive, or there’s something else going on behind the scenes that have investors signing those fat checks. We’re betting on the latter.
Pinterest Gets a Billion-Dollar Bump, Pins More Cash to Its Boards
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Pinterest Gets a Billion-Dollar Bump, Pins More Cash to Its Boards
