Imgur, the image sharing service popular with Reddit users and a regular winner of the “best bootstrapped startup” award at the annual Crunchies event is no longer going it alone. Following acquisition rumors and courting by just about every VC firm in the Valley, the company is today announcing a $40 million investment from Andreessen Horowitz. The round also included a smaller contribution from Reddit, the company says.
Along with the investment, Andreessen Horowitz’s Lars Dalgaard will join Imgur’s board.
The scrappy, San Francisco-based company had bootstrapped itself for five years to profitability, having grown in a large part thanks to adoption by the Reddit community, who often turn to the service to host their shared images or viral memes. Meanwhile, the company has been financially supporting itself via a few different avenues, including donations, pro users accounts, enterprise image hosting for customers like Yahoo and Stack Exchange, as well as advertisements.
However, the company claims that it’s the latter which brings in most of its revenue today – a figure Imgur declines to share, or even ballpark.
Given that the company is growing and profitable – it reports over 130 million unique visitors per month – the question for Imgur is “why raise now?” And also, maybe, why Andreessen?
Explains Schaaf, “over the course of the five years, we probably met with a dozen VCs and angel investors…but we never really clicked,” he says. The company was generating revenue, so it was never clear why they would need to team up with an outside firm, he tells us. “But once we sat down with Andreessen Horowitz, from the very first meeting we were laughing, coming up with actual ideas on what to do with Imgur and where to take it – it was actually a productive first VC meeting, which is really unusual,” Schaaf adds.
Also of interest: Andreessen Horowitz was the first VC that Imgur ever reached out to, and they only sat down with them this January to begin the discussions.
Another thing that Imgur liked about working with the firm, which also goes by a16z referencing a computer science insider’s joke, was that it brought more than just its investment to the table.
“They’ve got…like 80 other people working for them, and those people are there just to help you,” says Schaaf, speaking of the firm’s model involving services for entrepreneurs. “They’ve got a marketing department, a PR department, a department that can help you hire engineers, a department that can help you hire C-level or key hires,” he says, ticking off the reasons Imgur was sold on a16z.
“It was my opinion that everybody else could just give you money,” Schaaf continues. “Andreessen Horowitz is not like that, we could have every single one of their partners around our conference table right now figuring out a problem. They all work together, and we’re able to get help from any of them.”
What’s Next: Content Discovery, Mobile Upgrades, Better Ads
As for why now, Schaaf says it’s because Imgur as a company has grown more ambitious over time. The team now wants to focus on ramping up its product and improving the quality of its advertising. To date, Imgur has worked with a small handful of less than a dozen advertisers, including Rockstar Games (Grand Theft Auto), Paramount (Anchorman 2), USA (TV network), “Shark Tank,” AMC and others on campaigns which involve placing a image-based ad on Imgur in the hopes of going viral. This January, the company also introduced more tools for these sorts of advertisers, including analytics. But the company knows it’s not yet a “household name.”
In terms of the Imgur product itself, Imgur wants to make it easier for people to find not just the most popular images, as they can on the homepage today, but find those categories of photos that are most interesting to them. An update to Imgur due out in around a month will introduce this new content discovery feature, we’re told.
Meanwhile, on mobile, which today accounts for 30% or more of Imgur traffic, the goal is to offer a better experience that’s optimized for people on the go, rather than what’s currently closer to a replicated desktop experience. These changes are further down the road, though. Today, the company offers a iOS and Android app, as well as a mobile meme generation tool.
The additional funding will help across all these fronts, including both product and ads (more selective, quality ads, stresses Schaaf, not just more ads), as well as with hiring. Imgur expects to either double or triple its 13-person team over the next year.
In addition, the Reddit investment will finally formalize the already friendly relationship between the two sites, making them more symbiotic and maybe even more integrated in some way, though Schaaf declined to go into details as to what’s ahead for the two, only saying that there’s no promise of Imgur being Reddit’s “official” image host at this time.
Finally, asked to put to bed the rumors of that Yahoo deal and going the VC route instead, Schaaf carefully replied, “those were just rumors,” and “we just raised $40 million, I’m pretty sure that Yahoo is out of the picture, if they were ever in the picture at all.”
But, he insists that Imgur’s goals remain the same, even if they’re now thinking more seriously about scale. “Our goal is to become a big, independent business,” says Schaaf. “My pet peeve is people asking me what my exit strategy is…we didn’t start Imgur to just get rich and get out,” he says. “We want to conquer the internet in terms of self-expression and viral images.”