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Digg raises $28.7 million in Series C round

The perpetual Valley darling, long rumored to be up for sale, has instead infused its coffers with capital from Highland Capital Partners and announced an expansion effort.

Social news site Digg has raised $28.7 million in a Series C venture round led by Highland Capital Partners, and has in turn announced a major site expansion.

"Today is a big day for Digg," CEO Jay Adelson wrote on the company blog. "We're announcing a major expansion effort--the largest we've undergone in our history. With a new round of funding, we're accelerating many of the programs that we've been working on over the past several months, including investments in infrastructure, new feature development, international expansion and hiring all the people we need to get there."

The expansion in question will encompass many of the features that Adelson and founder Kevin Rose repeatedly talk about in their quarterly town hall Webcasts. Additionally, the site plans to explore geographic expansion options, including translating Digg into languages other than English, and "significantly" expanding the size of its San Francisco workforce.

Digg had long been rumored to be up for sale, with buyers from both the media and Silicon Valley sides of the aisle reportedly interested. The company walked away from a $100 million offer from the Al Gore-founded Current Media, which eventually launched an in-house social news service called Current News. News Corp., which acquired MySpace in 2005, has also been mentioned as a potential suitor, and there always seems to be a rumor that Google has wanted to buy Digg.

The company has not disclosed a post-funding valuation. But it's rumored that even the most attractive buyers weren't willing to offer a dollar value that Digg's executives wanted, so it's possible that a bigger valuation--in addition to helping it weather an increasingly difficult economic climate--could make it easier for Digg to insist on a price. Whether Digg has given up on a sale for the time being, or is still trying to make itself more attractive to a buyer, remains to be known.

For more, see Rafe Needleman's interview with Mike Maser, Digg's Chief Revenue & Strategy Officer.