Instagram

Instagram is a mobile photo and video sharing network. It began in San Francisco as Burbn, a location check-in app built by Kevin Systrom and Mike Krieger, and was refocused on photo sharing before its iOS launch on October 6, 2010. The app reached one million registered users within two months and 10 million within a year, and it later grew into one of the largest consumer social platforms, passing one billion monthly active users in 2018. Today it operates as a product of Meta Platforms, the renamed Facebook, Inc.

The financing history is short. On March 5, 2010, while the product was still Burbn, Systrom closed a $500,000 seed round from Baseline Ventures and Andreessen Horowitz; TechCrunch reported that Steve Anderson made the Baseline investment. In February 2011 Instagram raised a $7 million Series A that valued the company at roughly $20 million, with Benchmark Capital, Baseline Ventures, Jack Dorsey, Chris Sacca and Adam D'Angelo among the backers. In April 2012 it closed a $50 million Series B at a $500 million valuation. TechCrunch reported that Sequoia Capital led that round, with Thrive Capital, Greylock and Benchmark participating, and that the money had been wired only days before the sale was announced. Andreessen Horowitz did not follow on after the seed because it had backed competing apps.

On April 9, 2012, Facebook announced it would acquire Instagram for approximately $1 billion in a combination of cash and Facebook shares. The deal cleared review by the UK Office of Fair Trading and the US Federal Trade Commission and closed on September 6, 2012, at $300 million in cash and 23 million Facebook shares, shortly after Facebook's own IPO. Under Facebook, Instagram added Stories, IGTV, Reels and advertising tools; it reported one million advertisers by March 2017. Systrom and Krieger left in 2018 and Adam Mosseri became head of Instagram. The acquisition later became a focus of antitrust criticism over whether it removed a potential rival.

For investors, Instagram is the reference case for a fast, small acquisition outcome. Seed investors Baseline Ventures and Andreessen Horowitz entered at the Burbn stage and reached liquidity about two years later. The Series B investors, Sequoia, Thrive, Greylock and Benchmark, roughly doubled their money within days, because the $1 billion price was twice the $500 million round valuation. The company raised about $57.5 million in total before the sale, a small amount relative to the value it later produced inside Facebook, which shows how much of the long-term upside went to the acquirer rather than to the venture backers.