Oct. 23, 2013 at 7:58 PM ET
SAN FRANCISCO — Virtual scrapbooking company Pinterest just got a big boost, winning a $225 million round of equity funding that values it at $3.8 billion, two people with knowledge of the investment told Reuters on Wednesday.
The deal makes Pinterest one of the most valuable privately held consumer Internet companies just 2-1/2 years after it secured its first round of venture capital financing in May 2011.
The funding, led by Fidelity Investments, was first reported by AllThingsD. Pinterest Co-founder and CEO Ben Silbermann confirmed the funding to the website in a statement: “We hope to be a service that everyone uses to inspire their future, whether that’s dinner tomorrow night, a vacation next summer, or a dream house someday. This new investment enables us to pursue that goal even more aggressively.”
In just the past 18 months, Pinterest's valuation — it was pegged at $1.5 billion last May — has ballooned in dramatic fashion without proof of its money-making ability.
Silbermann unveiled a revenue strategy last month when he announced a "promoted pins" advertising product.
Still, with Twitter primed to go public in a matter of weeks, the spotlight could shift to Pinterest as a hot social media prospect coming down the IPO pipeline.
Like Twitter, Pinterest is among the most popular of the fast-growing crop of social media websites, but there remain signs that the company is struggling to keep many of its users coming back.
According to a recent survey by Reuters and Ipsos, 26 percent of the 807 people polled that had signed up for Pinterest said they do not use the service anymore and 9 percent of people who signed up have since shut down their accounts. The results have a credibility interval, a measure of accuracy, of plus or minus 3.9 percent.
Previous venture capital investors, including Bessemer Venture Partners, Firstmark Capital, Valiant Capital Management and Andreessen Horowitz, also participated in the latest round.
Copyright 2013 Thomson Reuters.