Instagram possibly valued at $500 million

In just two years, the social-networking photo app has grown exponentially in both value and user base, and now it might get even more investments.

Instagram screenshot. Instagram

The free iPhone photo sharing app that boasts users such as President Obama , skateboarder Tony Hawk, singer Justin Bieber, actress Zooey Deschanel, and rapper Snoop Dogg might be getting new funding that will value it at $500 million, according to The Wall Street Journal.

One year ago, Instagram was valued at just $25 million. Despite this enormous growth and a base of more than 15 million users , the popular app has struggled to make money since its inception in March 2010.

Unlike other apps and social-networking sites, Instagram isn't well positioned to feature advertising, paid content, or other e-commerce strategies since photos take up most of its screen real estate, reports The Wall Street Journal.

However, over the past year, the app raised $7 million from Benchmark Capital, Baseline Ventures and Andreessen Horowitz , and according to The Wall Street Journal, is poised to raise $40 million in a current funding round. But, some top venture-capital firms have decided not to invest because of the "app's high valuation and immaturity of its business," reports The Wall Street Journal.

For comparison, the social check-in app Foursquare raised $50 million in an investment last year, as did the newsreader Flipboard.

Another obstacle for Instagram is that the app is only compatible with iPhone, iPad, and iPod Touch. However, according to The Wall Street Journal, the company is currently working on a version that could run on Google's Android operating system.

Instagram did not immediately respond to CNET's request for comment.

 

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