ImageShack Rumored To Raise Money From Sequoia

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Update: See follow-up post here with comments from ImageShack CEo Jack Levin.

If you had to name the top five image-hosting services on the Web, would ImageShack be one of them? It turns out that it is No. 5 in worldwide visitors, with nearly 28 million last March, according to comScore. (Ranked above it are Facebook Photos, Flickr, Picasa, and PhotoBucket). You might be more familiar with ImageShack’s familiar frog logo, which appears on many of the photos it hosts across the Web.

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Sequoia Capital is familiar with ImageShack and its frog. Although it hasn’t been disclosed anywhere, a reliable source tells us that Sequoia recently invested in the company. Sequoia’s investment is believed to be in the $10 million range.

Up until now, ImageShack was entirely self-funded by founder Jack Levin, who built the service himself with his brother and a few part-time employees. The company claims it is already turning a profit (it charges an $8 a month subscription fee for unlimited image uploads). Levin was employee No. 25 or 26 at Google. He was the engineer who built Google’s early server clusters and self-healing architecture. At ImageShack, he has taken a similar approach to creating a site that serves 2.5 billion images a day.

Placing ads on just a fraction of those images could become a much more lucrative business than trying to upsell subscriptions, and that apparently is why Sequoia invested. Figuring out how to put ads in or around images on the Web is a big opportunity. It is a problem that Google (another company Sequoia invested in) is working on. Just earlier today at the Google Factory Tour, for instance, the company noted that hundreds of millions of image searches are done on Google every day and that it is experimenting with both display and text ads paired with image search results. But it is having a tough time.

Someone is going to figure out how to serve relevant ads on all those billions of images on the Web. Sequoia is betting that person will be a former Google employee rather than a current one.

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