We've confirmed from two sources, one directly involved in the financing and one familiar with the matter, that Instagram closed a $50 million round at a $500 million valuation prior to its $1 billion acquisition from Facebook.
The round was first reported by Alexia Tsotsis of TechCrunch.
"Instagram raised money on a Thursday and sold on a Tuesday -- 2X money in four days!" we were told.
Investors were Sequoia Capital, Thrive Capital and Greylock Capital.
Here's what happened:
Kevin Systrom, Instagram's CEO and co-founder, didn't want to sell the company. So he raised $50 million with every purpose of growing Instagram into a massive business.
When Facebook learned of the closed round, it "flipped out," says a source (we've always said Facebook was threatened by Instagram).
The source says Facebook swooped in in the last 24 hours and made the irresistible $1 billion offer, but it wasn't part of the talks when the $50 million financing closed a week prior.
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