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No Revenue, No Problem: Pinterest Raises Another $225 Million

October 24, 2013
URL: http://www.entrepreneur.com/article/229597

Pinterest has raised an additional $225 million in capital, bringing its valuation to a whopping $3.8 billion.

The pinboard photo-sharing social network scored the funds in a Series E round, led by Fidelity Investments with participation from Andreessen Horowitz, Bessemer Venture Partners, FirstMark Capital and Valiant Capital Partners.

This latest round comes on the heels of its February round of $200 million.

"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," CEO Ben Silbermann said in a statement. "This new investment enables us to pursue that goal even more aggressively."

The funds will be used for international expansion, mobile, acquisitions, growing its IT infrastructure and monetization – something the startup desperately needs to support its valuation.

Related: Pinterest Marketing Tips: What You Can Learn From 20 Big Brands 

To date the startup has raised $564 million without any visible source of revenue. But that will soon change.

Initially, when Pinterest launched in 2010 anyone could sign up under a personal account and post, or pin, images to his heart’s content. The startup then rolled out business accounts. The move allowed Pinterest to distinguish individuals who were say, just posting a picture of a dessert they wanted to try, from companies, like restaurants, that were hawking their famous banana cream pie to entice people to visit their business.

But companies aren’t dumb. With the business account launch, it seems like some business owners on Pinterest may have been wary of making the transition away from personal account status, as the word business could imply spending cash to stand out from the crowd (this isn’t their first social-network rodeo). And with the recent announcement of “promoted pins,” (a.k.a. advertising), it seems having businesses stand out is exactly what Pinterest has up its sleeve. To up the ante and get more businesses to make the switch, Pinterest is currently allowing companies to use this feature free of charge.

Related: Advertisements Are Coming to Pinterest Now, Too

In a recent blog post, Silbermann stated, “Nobody’s paying for anything yet—we want to see how things go and, more than anything, hear what you think.”

Keyword: "yet." It just seems like a matter of time that the dream tree house you have been ogling over, you soon will be able to buy, or at the very least fork over cash to stay in on vacation, and Pinterest, along with the businesses, will earn revenue.

While this injection of capital may seem high, the funding is in line with other social networks. Private (and struggling) social network Path has raised $41.2 million, location-based Foursquare has locked in $112 million, Facebook raised $2.33 before its IPO and Twitter is no small fry, raising $1.16 billion before it goes public.