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Sequoia Set to Lead $500M Valuation Round for Instagram

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Bubble much? It's an app. With ~20MM users. What am I missing?

You're missing that they sold prematurely.

First off, it's 30 million users.

What you're missing is how completely addicted many of those users are.

Arguably, Instagram is the most successful mobile social network after Facebook and Twitter.

And it's only growing from here, thanks to the Android version.

Hopefully soon they'll have a Web version, too.

It's estimated that roughly 30 percent of Instagram users have connected to Facebook, so based on AppData numbers, they picked up roughly 2.5 million Android users on launch day:

That's a lot of people.

Plus, Instagram has a very unique opportunity for advertisers, because it allows for some very creative and highly visual creative. There is barely ANY inventory for these kinds of ads on mobile without them becoming highly interstitial. In this sense, Instagram has a great opportunity to monetize and charge a huge premium to agencies.

That's an interesting point about Brands wanting a visual way to reach mobile consumers.

Btw, as of January 1, 2013, Instagram's user base is 120 million and growing...

Maybe Instagram is what Sequoia thought they were investing in when Sequoia invested in Color last year.

Facebook agrees with you Adam. :) They just acquired them. Very puzzling how this came down timing wise - a huge investment and then an acquisition a week later?

1) Instagram needed to show Facebook they were willing to walk away and build the company themselves. Raising that round made such a scenario credible.

2) Once Facebook saw that threat was real, they upped their offer.

3) Sequoia and other participants in the round get Facebook shares to distribute to their Limited Partners.

Everybody wins.

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