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Summary:

Tumblr, the web-publishing platform that has seen spectacular growth over the past several months, has landed a huge new round of funding led by veteran Sand Hill Road VC firm Sequoia Capital that values the three-year old, New York-based startup at about $135 million.

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We are hearing that Tumblr, the web-publishing platform that has seen spectacular growth over the past several months, has landed a huge new round of funding led by veteran Sand Hill Road VC firm Sequoia Capital. This news, which has also been reported by Fortune magazine, confirms rumors we first reported on last month. Sources with knowledge of the deal put the total raised at $30 million, which would give the three-year-old company started by entrepreneur David Karp a market value of close to $135 million.

Why so much interest in the New York-based startup, which competes with other publishing platforms such as WordPress (please see the disclosure below) and Posterous? The obvious answer is that Tumblr has taken off like a house on fire over the past year. Its monthly unique visitors have more than tripled, from about 2 million to more than 6 million, and comScore says the site had 1.2 billion pageviews in October, more than four times what it had just six months ago. Although other platforms also allow relatively easy publishing of content, Tumblr seems to have achieved these kinds of viral-growth levels primarily because of its easy “re-blogging” feature, which lets other Tumblr users share a post with a single click, much like a Twitter re-tweet.

As Om noted in his piece on recent financings for Groupon and several other hot startups, these kinds of deals are contributing to the growing fear that Silicon Valley could be in the grips of another tech-financing bubble, with valuations as high as $3 billion for Twitter and more than $5 billion for Zynga, and rumors of potential multibillion-dollar acquisitions by Google and other web players. Fred Wilson of Union Square Ventures recently talked about — and has written about — his concerns that the market for consumer-facing web services is getting frothy, which makes the Tumblr financing more than a little ironic, since Union Square is one of the company’s financial backers.

Not everyone is convinced that the rounds being raised by startups like Tumblr are evidence of a bubble, however: Chris Dixon, an angel investor and founder of Hunch, says he isn’t concerned, and isn’t going to get worried until “Google, Apple, etc. start hurting.” Dixon also noted there were bubble-type concerns raised after some early financing raised by Facebook and Twitter at what seemed like incredibly high valuations. Bryce Roberts, meanwhile, a partner with O’Reilly AlphaTech Ventures, says he believes Tumblr in particular is worth the reported valuation given to it by the latest financing.

Union Square and Spark Capital put $5 million into Tumblr last April, adding to the earlier rounds of funding they participated in, and bringing the amount raised by the company at that point to a little over $10 million. At the same time, Tumblr added a number of revenue-generating features to the site — including stickers and a marketplace where designers could sell their Tumblr themes — although it’s not clear how much revenue (if any) the company is actually generating.

Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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Post and thumbnail photos courtesy of Flickr user Tracy O

  1. I agree with Chris, I’m not worried about a valuation bubble in the startup game. Not now atleast. However, certain industries seem to be getting saturated. I feel blogs in general will fallout in the near future. The really legit blogs will stay around, as will corporate/startup blogs, but blogs in general are going to fade out from the masses, as people realize the blogosphere is crowded and competitive, even for niche players….

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  2. While some other reported valuations seem bubble-like, I think Tumblr is the real-deal. It’s had plenty of time to let it’s users define what it is, unlike when it started out and everyone believed it was something akin to FriendFeed. I think, also, that it has pulled away from Posterous because of a similar reason: While in some ways, Posterous is a more intuitive and versatile platform, the name “Posterous” and how the creators initially positioned it made it sound, primarily, like a place to manage *other* things: Post once there via email and it will simultaneously post to other sites. In hindsight, that’s a “feature,” not a product. (I would argue that being a Bay-area company led to that kind of thinking.) However, Tumblr, has played down (since that early “life streaming” era) trying to define itself by how *some* people use it.

    Perhaps more than anything, Tumblr is in New York and has been embraced by “content” people, not tech people. Great artists and very funny people have created some remarkable things there.

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    1. Thanks for the comment, Rex — I think the easy sharing or re-blogging of posts has made a big difference for Tumblr as well.

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  3. Some of you folks are dreaming. We all know what happened here. They tried to soft shop themselves, there were no buyers, and then turned to another raise because Tumblr is trapped. No serious company is going to buy a pile of **** that cannot me turned into cash.

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  4. [...] sources say the three-year-old startup, which is run by 24-year-old founder and CEO David Karp, closed a huge new round of funding last month — estimated at $30 million — led by veteran Sand Hill Road VC firm Sequoia Capital. If [...]

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  5. [...] Sequoia Capital, Union Square Ventures and Spark Capital. The latest funding, which follows up on Mathew’s report last month that the company had raised a huge round, brings Tumblr’s total to about $40 [...]

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  6. [...] with younger users, is that it is extremely easy to set up and use — but it also offers many of the same real-time sharing options that have become popular with Twitter and Facebook. For example, Tumblr makes it easy for users to [...]

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