Blog Post

Photo Sharing App Instagram Snaps Up $7 Million

Are you spotting a trend here? Hot on the heels of mobile photo sharing site Path picking up nearly $9 million in funding, Instagram, another photo-sharing app, has picked up $7 million for itself, with the financing being led by Benchmark Capital.

In a blog post, Instagram says the funding will be used to “scale up” its operation by adding more engineers and other staff. Currently, the four-month old app, which is available only on iOS at the moment, only has four employees, according to the blog.

Given how young and small the operation is, it’s amazing how big it has become already: Instagram says that it currently has more than 1.75 million active users, with more than 2 million registered overall, who can take photos add filters and share them on sites like Facebook, Twitter and Tumblr, or just store them to send in other ways like email or photo messages. There are more than 290,000 photos posted per day, says the company.

Business model. For now, everything on the site is free, although Instagram might well start to add more services — extended filters, for example — that people can use for a fee.

The company seems to be taking a page from Twitter’s book and looking at ways of incorporating marketing into its service as a potential revenue stream. Last week Instagram added a hashtag function so that people can tag photos and view them in specific categories. This is already getting used by some brands, such as Brisk Iced Tea, which is encouraging people to tag their photos with #briskpic for the chance to get the pictures featured on cans of iced tea that will be handed out at the SXSW new media confab in Austin, Texas.

Today, the startup also named an “extended team” of advisors to the company: Matt Cohler, from Benchmark Capital, will be among them. Cohler was formerly VP of Product Management at Facebook. New angel investors include Adam D’Angelo, formerly CTO of Facebook and one of the co-founders of Quora; Jack Dorsey, co-founder and chairman of Twitter and currently CEO of Square; and Chris Sacca, formerly Head of Special Initiatives at Google (NSDQ: GOOG) and the founder of Lowercase Capital.

Steve Anderson and Baseline Ventures, a previous investor, also participated in this round.