Digg’s latest funding round valued the company at “around $175 million” we’ve heard from a source with knowledge of the deal. The company raised nearly $29 million in the round, which was announced earlier this month.

The valuation seems about right for the company, which attracted 15.7 million worldwide visitors in August, up from 10.1 million a year ago (Comscore) (click here for Quantcast data, which shows much higher traffic). The financing was a second choice for Digg, which thought it was getting bought by Google for $200 million until a last minute glitch killed the deal. After it was clear the deal wasn’t going to happen, the company pursued a financing instead.

We’ve also confirmed that founder Kevin Rose and CEO Jay Adelson sold some personal stock in the transaction, as GigaOm first reported. However, our sources say the dollar amount they each took off the table was relatively small, about $2 million each, and that the venture capitalists had an appetite for more (since they’re the ones buying the stock). That’s good news for the company because it shows Kevin and Jay, at least, think the valuation was low, and were willing to keep their stock in play.