Instagram Bought by Facebook

Posted by Clive in Social Media | 0 comments

Instagram Bought by Facebook for $1 billion… Another Tech Bubble?

Instagram has announced that it has been bought by Facebook in a deal worth an incredible $1 billion. Incredible because Instagram is only 2 years old, it makes no recorded profit, it has 13 employees and it was up until this month, just an iPhone app (now it is also on Android).

Instagram allows people to take pictures on their smartphone, edit and stylize them using different filters, then share with friends on other social networking sites such as twitter and facebook.

Instagram is another company born out of the technology mecca that is California and Stanford University. It was founded by Kevin Systrom and Mike Kriegar in 2010 out of a love of the old ‘instant’ Polaroid snapshots.

In March 2010 Systrom acquired $500,000 of seed investment and this was followed in February 2011 by another $7 million funding round valuing Instagram at around $25 million. Another funding round occurred this month just before the Facebook announcement.

Instagram managed to raise around $50 million giving it an approx. valuation of $500 million. The Facebook acquisition doubles that valuation, not bad for a weeks investment and perhaps another pointer towards a tech bubble?

In the past few weeks Instagram has launched on the Android platform instantly giving it access to millions of new users and markets.

Facebook obviously swooped in a strategic decision to purchase the company before someone else did. What they are getting for their money is a great app, a very strong userbase that loves the product, enourmous growth potential as other phone platforms are integrated and probably the most important thing for facebook, access to the skillset of the team behind the app.

Normally when Facebook get the chequebook out it is to take the talent over to their own site and shutdown their project. This time it will have to be different. 30 million people is alot of people to upset.

Lets just hope that all of those 13 employees were offered stock as part of their renumeration.

Instagram Statistics

Photos: Instagram