Coverage: Pinterest raises $150 million, valued at $12 billion

Pinterest Inc. raised $150 million in venture funding from a group of existing investors at the same share price as two years ago as growth at the closely held company fails to keep pace with internet rivals.

Ellen Huet and Sarah Frier of Bloomberg News had the news:

The last fundraising round was in April 2015, valuing the business at about $11 billion. Because the number of shares in the company has grown over time, its new valuation is $12.3 billion, Pinterest said. The company filed securities documents associated with the financing, which were analyzed by private stock market firm Equidate and shared with Bloomberg.

By raising money, Pinterest is choosing to delay a potential initial public offering as its business model matures. The company generates revenue by selling ads that look like posts on its site. Each month, 175 million people use Pinterest to collect and post images related to fashion, travel, cooking and other interests. The San Francisco-based company is targeting revenue of more than $500 million this year, people familiar with the matter have said.

Pinterest, once one of Silicon Valley’s hottest startups, has been overshadowed by its faster-growing competitors. In the time since its last fundraising, Snap went public, Facebook-owned Instagram reached 700 million users, and Google built competitive image-based shopping technology.

Alex Heath of Business Insider reported that the raise could delay its initial public offering:

Choosing to raise more money now could delay Pinterest’s eventual initial public offering. The private company had previously raised about $1.3 billion in funding to date.

A Pinterest spokesperson said the company plans to use this latest round to invest in its visual search technology and user growth. Its recently-announced “Lens” feature can recognize objects like a pair of sneakers through a phone’s camera and show related photos.

Pinterest reportedly expects to make $500 million in ad revenue this year, up 67% from $300 million in 2016. The company recently started rolling out its first major ad campaign in the US to educate people on how to use its service.

The Pinterest app has 175 million users, the majority of which are women and outside of the US.

Leena Rao of Fortune pointed out that the flat price is a warning sign:

The flat price of Pinterest’s shares shows that investors aren’t willing to mark up the value of the company, even though it has had two years to prove its additional value. Bloomberg also reported that the last round valued Pinterest at $11 billion but because there are more shares available in this round, the company’s valuation jumped to $12.3 billion.

This latest funding, which was raised from existing investors, brings the company’s total funding to over $1 billion. Previous investors in Pinterest include Andreessen Horowitz, Fidelity, and Bessemer Venture Partners, although it’s unclear which of them agreed to invest again.

Pinterest, whose service is best known as a virtual pin-up board for collecting images of home decor, recipes, and travel destinations, makes money primarily through online and mobile ads, similar to fellow social media companies Facebook and Twitter. However, Pinterest’s ad business is relatively small compared to Facebook.