CONFIRMED: Pinterest Has Raised A Huge New $US225 Million Investment (Over Half A Billion Raised So Far)

Pinterest has confirmed a whopping new $US225 million investment that gives the social sharing site a jaw-dropping $US3.8 billion valuation, the company told Business Insider.

This is on top of a massive $US200 million investment Pinterest raised in February, at a valuation of $US2.5 billion. So it’s raised $US425 million this year alone and $US563 million total.

A new investor, Fidelity, led the round with participation from existing investors, Andreessen Horowitz, Bessemer Venture Partners, FirstMark Capital, and Valiant Capital Partners. Japanese e-commerce giant Rakuten, which invested $US100 million in May of 2012, did not re-up, notes Kara Swisher and Liz Gannes at AllThingsD.

No one questions the rising popularity of the site, which let’s users share pictures and websites with each other.

Pinterest has become second only to Facebook when it comes to referral traffic, according to Shareaholic, a company that distributes sharing widgets and monitors where traffic comes from on the web.

But how will Pinterest will use its popularity to create enough revenue to justify that $US3.5 billion valuation?

Good question because its advertising programs aren’t fully cooked yet. Earlier this month, it started testing one, called the “promoted pin” which are paid ads that appear within the search results and category feeds.

A Pinterest spokesperson says its too early to say how well that program is doing but advertisers have high hopes. “Brands have wanted to do something on Pinterest for a long time,” Lisa Weinstein, President of Digital, Data & Analytics at Starcomm MediaVest, told BI Intelligence. MediaVest represents companies like
P&G, Walmart, Microsoft and Coca Cola.)

Given how much referral traffic Pinterest generates, it’s possible it might also create some sort of “affiliate” model, where it makes money when it sends people to a website and they make a purchase. We’ll see.

Pinterest says it will use the new $225 million in a variety of ways:

  • International expansion. It’s grown its international users by 125% since the beginning of the year. (Pinterest recently launched in UK, France and Italy and plans to launch in 10 more countries before the end of the year.)
  • Investment in mobile which, it says, has grown 50% since the beginning of the year to become more than 3/4 of all usage.
  • More advertising and other income-producing, including international expansion of its “promoted pins” ads.
  • Investments in the technical infrastructure to make the service faster and better.
  • Acquisitions, both for talent and technology.

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