Pinterest Raises Massive $225M Series E, Valuing The Firm At $3.8 Billion

According to sources at AllThingsD (which TechCrunch now confirms) Pinterest has closed on a significant new round of financing: $225 million in new funding, with Fidelity Investments in the lead. TechCrunch sources are now confirming the full AllThingsD report. The funding values Pinterest at $3.8 billion, an exceptionally rich valuation for the young company.

The round included participation from current investors Andreessen Horowitz, FirstMark Capital, Bessemer Venture Partners and Valiant Capital Management, but not its most recent investor Rakuten. The Japanese e-commerce giant invested $100 million in the service in May 2012.

That May 2012 round of funding was said to value Pinterest at $1.5 billion, or less than half of what the company is now worth on paper. That’s an impressive $2.3 billion market cap bump in just over a year.

The funding is being used for international efforts. The company has hired country managers recently in Italy, France, and England.

The $225 million will also be used to purchase “talent” and “technology.” Expect Pinterest to pick up a number of small firms, in mostly stock transactions that contain a cash component. Pinterest has now raised $565 million.

The question now is how will Pinterest make good on a $3.8 billion valuation. The answer might be an untraditional advertising model. Charging advertisers for impressions or relatively rare mobile clicks might not earn enough money. But if Pinterest developed an advertising scheme that looked more like a revenue share where it gets paid dollars when its ads lead directly to people buying things, opposed to getting paid cents when people click, it could earn revenue worthy of its valuation.

Still, given its high valuation, the company has almost priced itself out of acquisition range. If it can’t IPO, it may struggle to find an open door elsewhere.

UPDATE:

Pinterest also confirmed the funding, investors and valuation, with a statement from co-founder and CEO Ben Silbermann to AllThingsD:

“We hope to be a service that everyone uses to inspire their future, whether that’s dinner tomorrow night, a vacation next summer, or a dream house someday. This new investment enables us to pursue that goal even more aggressively.”

They’ve also released some stats:

Pinterest will use the additional capital for corporate purposes including:
International expansion that builds on 125% international growth since the beginning of the year. Pinterest recently launched in UK, France and Italy and plans to launch in 10 more countries before the end of the year.
Investment in the core Pinterest service, especially mobile which has grown 50% since the beginning of the year to become more than three-fourths of all usage (for comparison, Linkedin just announced 38%).
Continued development of monetization, which first began testing earlier this month, into a global program.
Capital investments in technical infrastructure to make the service faster, more reliable and more efficient.

Additional reporting: Alexia Tsotsis, Josh Constine

Top Image Credit: Flickr