Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
In case you missed it, word broke yesterday that Facebook was buying mobile photo sharing app company Instagram for a stunning $1 billion. Some of the metrics under the surface are stunning – such as the 13 employees… many hired within the past 6 months, and the lifespan of under 2 years. With no revenue. The company had been valued at $500M based on a round of funding… last week!
All based on a simple premise – creating a very simple way to share photos via mobile devices. Perhaps a crazy valuation but a fascinating story either way.
Via Bloomberg
- Facebook, the biggest social- networking service, is buying the Instagram mobile photo-sharing application for about $1 billion in cash and stock, using its biggest acquisition yet to lure users of mobile devices. Instagram, owned by San Francisco-based Burbn Inc., was valued at $500 million after raising about $60 million last week from investors including Sequoia Capital, said people with knowledge of the funding who asked not to be identified because the matter is private.
- Instagram lets users take pictures with smartphones, retouch them with borders and filters, and then post the images on social networks. Founded in 2010, it has become the most popular free photo-sharing application on Apple Inc. (AAPL)’s App Store and boasts more than 30 million users.
- Owning it may help Facebook attract handset users and advertisers who target them, said Rebecca Lieb, an analyst at Altimeter Group LLC. “In order to monetize mobile, Facebook needs a lot more mobile participation,” said Lieb, who is based in New York. “What they bought with Instagram was a photo app with highbrand recognition and an enormous audience.”
- Given Instagram’s employee base of 13, Facebook is paying $76.9 million per person for a company that has no publicly disclosed source of revenue.
- “The value really is not what Instagram is, but what Instagram could have been in the hands of competitor,” Valdes said. “That’s the reason why the valuation was so high.” Facebook, which intends to raise $5 billion in the biggest IPO of an Internet company, says it plans to let Instagram remain independent.
- Instagram was introduced in October 2010 by Kevin Systrom and Mike Krieger. Building on its popularity among iPhone users, last week the company added an application for devices that use Google’s Android operating system.
- Instagram received seed funding of about $500,000 from Andreessen Horowitz and Baseline Ventures in 2010. It raised a $7 million round in 2011, when it had 1.75 million users, from Benchmark Capital and a group of angel investors including Twitter Inc.’s Jack Dorsey and Quora Inc.’s Adam D’Angelo.
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