Facebook has announced a deal to buy Instagram, a mobile photo sharing app for $1 billion in cash and stocks. The number seems exorbitant considering Instagram is just a 2-year old start up with 13 employees under its payroll. But the fact is if you have a deep pockets and patience you can put the money on the hottest company around. Facebook is one of the companies that can afford to offer such a high valuation for a start-up. The “overnight”meteoric success of Instagram lies in the way it has positioned itself, instead of just projecting itself as a photo sharing application it positioned itself as a social network in its own way. The news of Facebook buying insatagram for such a huge sum was shocking for many industry analysts and there were some speculation whether the Instagram will lose it originality. But in the long run it seems Facebook had really made a sound decision. Initially the Insatagram app was available for the users of iOS alone and the number was somewhere around 27 million registered users. Due to its ever-increasing popularity they also launched the app for Android platform and within 24 hrs of launching it registered 1 million downloads. That’s a whopping figure for any photo sharing apps.
- Facebook Buys Instagram for $1 Billion
Mike Krieger and Kevin Systrom, founded instagram in the year 2010 and made a billion dollar company in 2 years time this is by any standard a great achievement in itself. Systrom during its initial days raised a seed capital of $500,000 from Baseline Ventures and Andreessen Horowitz. The real infusion of capital came in February 2011, of $7 million from investors, including Benchmark Capital, Jack Dorsey of twitter, Chris Sacca and Adam D'Angelo valuing Instagram at $25 million. Facebook and Google both started wooing Instagram but after the release of the app for Android platform it secured a funding of $50 million from venture capitalist making it a $500 million company. But within a week after launching app for android Facebook buys Instagram for $1 billion. Investors are happy about the way things have worked out but time will tell who will emerge out as real winner, facebook, investor, Instagram or the users.
