Pinterest’s $100 Million Infusion: It’s the E-Commerce, Stupid

Social bookmarking site Pinterest has landed a $100 million round of funding on a $1.5 billion valuation today. The investment was led by Japanese e-commerce platform Rakuten. By taking money from a foreign technology company, Pinterest bucks the trend of U.S. startups clamoring for money from U.S. venture capital firms. Rakuten’s funding and partnership can help Pinterest grow in both domestic and foreign markets while increasing the site’s influence in e-commerce and online shopping.

Pinterest, which has grown quickly in 2012 to be the third largest U.S. social network behind Facebook and Twitter, is a service where people can “pin” photos and interesting Web artifacts to a digital board to share with their friends and online community. It is known to be popular among women on the Web and has gained several celebrity users, including Reese Witherspoon. 

Rakuten is one of the top Internet companies in the world. Its flagship website is Rakuten Ichiba, an e-commerce platform that is the largest in Japan and one of the largest in the world. It owns various worldwide properties including in the U.S., Priceminister in France, Ikeda in Brazil and in the United Kingdom. 

“While some may see e-commerce as a straightforward vending machine-like experience, we believe it is a living process where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining. We see tremendous synergies between Pinterest’s vision and Rakuten’s model for e-commerce. Rakuten looks forward to introducing Pinterest to the Japanese market as well as other markets around the world,” said Rakuten CEO Hiroshi “Micky” Mikitani in a press release. 

“Initially, the partnership with Rakuten will help support Pinterest’s global expansion,” said Neel Grover, CEO of Rakuten’s “Rakuten’s global investment in e-commerce is illustrated by a presence in 17 countries and regions through 13 group companies. Longer term, there are a number of opportunities for meaningful partnerships between the two companies, as there are tremendous synergies between Pinterest’s vision and our model for e-commerce where both retailers and consumers are more social, interactive and empowered.”

According to the technology blog AllThingsD, Pinterest CEO and cofounder Ben Silbermann was looking for a “global strategic investor” that can help the company grow internationally and help stave off foreign clones. There were no U.S. institutional investors and, “that is the way Pinterest’s quirky leadership wanted it,” according to AllThingsD. 

Pinterest had raised about $37.5 million through its Series A, Series B and angel rounds before the large investment from Rakuten. Its previous funding came from large VC firms and individual investors such as Jack Abraham, Ron Conway, Bessemer Venture Partners and FirstMark Capital. 

The future of Pinterest is likely tied to e-commerce in one fashion or another. With its high percentage of women users and focus on the “interest graph,” Pinterest is in the perfect position to become a recommendation engine for both online and offline purchases. In this regard, Rakuten is a perfect partner for Pinterest in that the social bookmarking site can help drive interest in Rakuten’s digital e-commerce properties. 

“Our goal is to help people discover things they love, by connecting people through their shared interests. Bringing Rakuten on board gives us an amazing opportunity to move a step closer to this goal,” said Silbermann in a press release. 

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