Summary:

Despite competition that is growing seemingly by the day, popular link shortener Bit.ly has raised $10 million in its latest round of fundin…

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Despite competition that is growing seemingly by the day, popular link shortener Bit.ly has raised $10 million in its latest round of funding. Bit.ly says it now shortens more than 200 million links a day, up from about 75 million a year ago, a feat that is especially impressive considering Bit.ly has lost its position as the default link shortener on Twitter to Twitter itself. Other players, including Google (NSDQ: GOOG) and Facebook have also launched their own shorteners — moves that Bit.ly says in its announcement “affirm the importance of the category.”

Bit.ly’s success goes against two trends: Startups that have been largely dependent on Twitter for their business have had trouble raising outside funding this year, as investors worry that Twitter will cannibalize their business. And, several URL shorteners have either shut down or very loudly complained that it is difficult to make money in the space.

Bit.ly has managed to make money through a PRO service that lets publishers create their own custom short domains. Bit.ly says that product now has 3,000 customers, including Yahoo (NSDQ: YHOO), The New York Times (NYSE: NYT) and ESPN.

The new funding brings Bit.ly’s total backing to more than $12 million. The round was led by RRE Ventures. AOL (NYSE: AOL) Ventures also participated, as did existing backers OATV, Mitch Kapor, Founders Fund, SV Angel, Joshua Stylman, Peter Hershberg, David Shen, and Betaworks, the New York City tech incubator and investment firm that founded the company.

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