Pinterest’s New Funding About Expanding Global Footprint, Monetization

Pinterest confirmed the news today that it had secured a $100 million financing round, at a massive $1.5 billion valuation. The round was led by international ecommerce and web business company Rakuten, which began building its empire in Japan and has since made key acquisitions and advancements around the world to give it global reach. Existing Pinterest investors Andreessen Horowitz, Bessemer Venture Partners, FirstMark Capital, and a number of angel investors also participated. But Rakuten made the bulk of the massive investment, and Hiroshi Mikitani, CEO of the Japanese company, told FT that he’d have gone it alone if Pinterest hadn’t already made arrangements with those existing investors.

The company clearly sees huge potential in Pinterest, which isn’t surprising given that social network’s trajectory. In April, comScore reported that it had reached 20 million users, adding more than 19 million of those in just a single year. In an interview with Michael Jaconi, CEO of Rakuten subsidiary FreeCause and Executive Officer at Rakuten, the executive explained just what it was about Pinterest that made it such an attractive investment target for the multinational firm.

“We pride ourselves on being a more social and interactive ecommerce company than others,” he said. “In that, we have this mission of empowerment, trying to bring our retailers, our merchants and our consumers closer together and foster communication between them. In looking at the Pinterest model, we saw this fascinating and powerful way to enable people to find, discover and share the things that they love.”

Of course, Rakuten could tap a lot of that power using Pinterest’s existing publicly available integration tools, which allow sites to embed “Pin it” buttons that make it easy to share items on ecommerce and other sites with their followers, and that wouldn’t have cost the company nearly $100 million. Jaconi concedes that leveraging Pinterest’s existing social discovery tools isn’t the only reason Rakuten wanted to invest.

“We really like the company and love their vision, and we really wanted to learn more and help them grow around the world,” he said. “As our goal is to broaden the services and the products that we provide online, and in pursuit of becoming the number one internet services company in the world, investing in these emerging technologies and in new innovation is something that’s incumbent upon us to help us achieve that goal.”

Going further, Jaconi articulated what it was specifically that Rakuten thinks it can help Pinterest with besides just filling its coffers and making sure that it’s a long time before it has to go back to the funding well.

“What our goal is, is to really help the Pinterest team grow their service around the world. Rakuten of course has a wonderful springboard into the Japanese market, but we’re a global company, with operations in 17 countries around the world, and we’re going to help bring Pinterest to the Japanese market, and to all the markets in which we compete.”

Pinterest users currently originate mostly in the U.S. (around 65 percent as of February), so it definitely has room to grow in other markets, where it consistently places lower down in terms of the most popular sites by visitor frequency than its 20th place ranking in the U.S. Pinterest also faces an army of clones in overseas markets, so any steps it can take to reclaim those markets and give its own brand higher visibility will help it continue its growth long-term.

In the FT interview mentioned above, Rakuten CEO Mikitani also suggested that in his new role as an advisor to Pinterest, he’d be helping the company work ecommerce strategies into its business model. While Jaconi couldn’t speak to Pinterest’s specific plans, he did say that he thinks Pinterest CEO Ben Silbermann recognizes the tremendous opportunity to work with a businessman of Mikitani’s caliber who has extensive experience building ecommerce and other businesses.

Opting to secure a potential long-term business partner with goals in line with their own could help Pinterest considerably more than if it had sought out funding from VCs alone. And Rakuten, which has done a good job of keeping the independent, autonomous startup feel alive even in companies it has acquired outright might be an especially good choice, in terms of giving Silbermann and his team access to expertise and resources to accomplish a lot more, as well as making sure they have the leeway to keep steering their own ship.

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