San-Francisco-based Scribd, the so-called “YouTube for documents,” has attracted a lot of attention — including plenty of suitors from Silicon Valley’s venture capital firms.
So it comes as no surprise that, shortly after launch, it has raised $3.7 million from Redpoint and original seed investor Kinsey Hills Group. Co-founder Trip Alder wouldn’t disclose precise valuation the investors placed on Scribd, but did say the rumored $17.5 million post-money valuation is just about right.
The round closed a few weeks ago, but Trip had waited for the legal work to be done before saying anything. Several top firms were interested, and the high valuation resulted from competitive bids for the deal. Venerated VC firm Sequoia Capital was among those turned down. Redpoint, Trip says, offered the right combination of track-record (Redpoint partner Geoff Yang backed Tivo, MySpace and Excite, among others) and attractive terms.
Pre-launch, the Y-Combinator graduate had tried to raise significant funds, and though Trip had expected that Y-Combinator would connect him to scores of potential investors, he says, this did not happen. Ed Kinsey and Michael Hills came to the rescue with $40,000, allowing Scribd to scale enough to go live.
Shortly after the launch, Scribd was racking up 100,000 unique visitors on a daily basis and suddenly, the previously tepid investors were banging down the door. An associate at Redpoint approached them and the rest flowed from there.
We previously covered Scribd and expected it to run afoul of hawkish publishers out to protect their copyrights, but Trip says this has not really been an issue. On average, Scirbd gets about one “takedown” notice a day, and Scribd takes down the material within 24 hours. Whether this situation will sustain itself as Scribd grows is yet to be seen. Copyrighted Harry Potter books, for some reason, are continually uploaded, and Scribd does a search each day for them preemptively.
Right now, they have limited competition. A potential competitor called Scriptovia has emerged to focus on getting high-school and college students to share their papers and lab reports, but it has not seen much action. And now that Scribd has a Facebook application, that niche might already be served.
The company intends to use the money to build out an API, expand its programming and marketing teams, and move into real offices. Until now, it has been three guys in a small apartment.