Fab Hits A Million Users, Is Raising Many Millions of Dollars

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Design-focused flash sale site Fab announced an important user milestone today, the site hitting a million members; The company celebrated by giving each of their users $10 to spend and another $10 more to each friend they signed on.

The invite-only site has seen massive success since it pivoted from a gay social network in June, bringing in another 275K users in the past 30 days — with around 150K people visiting the site through its daily email alone. The company is operating profitable, expected to bring in $20 million in revenue in 2011.

Fab is taking advantage of this boom to raise some cash, we’ve heard from multiple sources. The company is raising a “huge” Series B round, which one source pegs as between $40 – $50 million at a ~$250 million post-money valuation. Another source said that the valuation was in the “hundreds of millions.”

Existing investors First Round Capital and Menlo Ventures will be following on, and the round has a new top-tier investor who I haven’t quite yet sussed out. From what I’m hearing term sheets have been signed and the deal is set to close early December.

“Our buyers’ job is to find stuff that will make people smile,” Fab CEO Jason Goldberg, who wouldn’t give comment on the funding rumors, told me earlier today, “If they can do that the product will sell, and if we keep doing that the next million will come faster than the first million.”  Goldberg says that flash sales are just the start, and the company is presently working on supporting overnight shipping and in addition to adding advanced social features.