Business

Yahoo said to be mulling investment in, or acquisition of, Tumblr

If you can’t be cool, why not buy someone who is? That’s what Yahoo is looking to do with an investment in — or perhaps outright acquisition of — blogging service Tumblr, whose valuation could be as high as $1 billion.

All Things D first reported the rumors of a Yahoo investment in Tumblr, and Adweek followed up citing sources of its own. Adweek’s report seems more certain that Yahoo is interested in an outright acquisition, while ATD’s report is more circumspect.

Tumblr has raised $125 million in funding to date at a reported valuation of $800 million. It is reportedly in talks to raise another round of funding at a reported $1 billion valuation, according to ATD.

While Tumblr is popular, it only made $13 million in revenue last year, when it first started selling ads, and hopes to grow that to $100 million in revenue this year.

Yahoo CEO Marissa Mayer has already presided over several acquisitions as head of the company and just a week ago she snapped up two more startups — GoPollGo and Milewise. Most of the deals thus far have been much smaller deals, more focused on hiring strong talent rather than getting shiny new products. In fact, Yahoo has shut down most of the services it has purchased.

A deal to buy New York City-based blogging powerhouse Tumblr would act in an opposite fashion, and Yahoo would almost certainly leave Tumblr’s products fully intact. But Tumblr has hardly monetized its large audience and just a few weeks ago it introduced a mobile ad platform to let brands to advertise inside Tumblr’s mobile apps. If Yahoo were to take its advertising know-how and apply that to Tumblr’s platform, it could lead to big bucks.

“If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career — aesthetics software technology and fast-growing — you could not land on a better choice,” a source told AllThingsD.

Tumblr’s investors include Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners, The Chernin Group, Spark Capital, and CrunchFund.

Yahoo did not immediately respond with comment but we will update this post if the company gets back to us.

Marissa Mayer photo via Sean Ludwig/VentureBeat


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