Imgur accepts $40 million in venture capital two months after announcing it wouldn’t sell out

Giuseppe Macri Tech Editor
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The Internet’s most popular independent photo hosting and sharing website Imgur accepted $40 million in venture capital funding from firm Andreessen Horowitz and Reddit Thursday — two months after announcing it wasn’t interested in outside investors, and would remain independent.

Co-founder Alan Schaaf and COO Matt Strader announced in late January a new analytics tool allowing users to see where their shared content receives the most web traffic. They also stated the company had attained enough funding to remain independent for at least five years, and that it wasn’t interested in accepting venture capital offers.

“We are bootstrapped from the beginning, so we’ve had to be profitable since the beginning,” Schaaf said in a Forbes report. “Revenue is not where the focus of the company is at. We are focused on pushing out cool products like our analytics. We want to be the best place on the Internet. That’s where the focus is at.”

At the time Imgur was pulling down around 120 million unique viewers, giving the site 4.5 billion different page clicks every month, which amounts to about 1.4 billion individual images viewed on the site daily. For a staff of 11 people squeezed into a fourth floor office with 10 desks in a gritty San Francisco market neighborhood, that’s more than a little impressive.

In just the two months since, Imgur’s traffic has gone up to 130 million unique visitors and more than 40 billion image views monthly. Interest in significant outside funding appears to have increased along with the traffic.

“We’d had a few meetings with firms over the last several years, and we just never really clicked,” Schaaf told Forbes in a follow-up interview. “But when we went to Andreessen Horowitz, we were all soon laughing, talking about new product ideas for Imgur.”

“Being bootstrapped made us that much cooler, but now we want to truly become a household name. It did become inevitable,” Schaaf said in Wall Street Journal report.

As a college student in February 2009, Schaaf built Imgur as a “gift” photo-sharing tool for the social media platform Reddit, where the site has appropriated the large majority of its traffic since launch. At the time, his only inspiration was to create an “image-sharing tool that didn’t suck,” and allowed easy, free and anonymous image uploads that today range from memes and GIFs, to Photoshop pieces and breathtaking photography.

Before Thursday the only outside funding Imgur ever accepted was a $25,000 grant in 2010 from Schaaf’s Ohio University alma mater. In the 10 weeks since Imgur’s announcement to remain independent, founders have suddenly developed grand plans for a massive expansion.

“Look, we are profitable, but we aren’t so profitable that we could suddenly double or triple our team size, which is what we want to do,” Schaaf said.

Those plans include moving to a bigger office, hiring an additional three people per month for the rest of the year to more-than double the staff’s number of developers, and create its first sales and marketing divisions.

“We’ve been pretty under the radar as a company the last couple years, and now more recently we want people to know what we’re about,” Schaaf said.

Imgur’s announcement to accept venture capital funding did not disclose how much the startup was valued for, and Schaaf’s newfound enthusiasm for big bucks did not extend to the valuation process, which he said was long and painful. The co-founder indicated that a guess of around $240 million — the price Reddit sold for in 2012 — was “a nice try.”

Part of the $40 million in capital going to Imgur will come from Reddit as well — a deal that will likely include future joint endeavors, and prevent another Imgur-like startup from getting a foothold in the site that still drives the majority of Imgur traffic.

“We absolutely worried about ruining the party,” Andreessen general partner Lars Dalgaard said of the deal’s potential to upset the Imgur community. “But we are in love with what they are doing. This is about giving them the time and space to expand their vision.”

Andreesen added that monetization “is not the discussion right now.”

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