By Alexandra Burlacu | May 17, 2013 01:27 PM EDT
Blogging service Tumblr is quite popular in the tech community, but would it be able to help ailing Yahoo from slipping even further into oblivion?
Yahoo lost most of its appeal some good while ago, and after all sorts of changes in strategy and management, the company is reportedly considering new options. If it can't be cool on its own, maybe it can by association. Yahoo is reportedly considering an investment in, or even acquisition of Tumblr, a company with a valuation potentially as high as $1 billion.
All Things D (ATD) was the first to report on the rumored Yahoo investment in Tumblr, followed by AdWeek with its own sources. According to AdWeek's report, Yahoo is more interested in an acquisition rather than just an investment. ATD, meanwhile, is more reserved.
The blogging service raised $125 million in funding so far at a reported valuation of $800 million, and it's reportedly negotiating another round of fund raising at a reported $1 billion valuation, ATD reports.
On the other hand, despite its wide popularity, Tumblr only generated $13 million in revenue last year, when it first started selling ads. The company hopes to have a better year and raise that amount to $100 million in revenue.
Current Yahoo CEO Marissa Mayer has been busy since taking over and has already overseen several acquisitions at the helm of the company. Just a week ago Mayer grabbed two more startups - GoPollGo and Milewise. Most strategies so far focused on hiring valuable talent rather than getting shiny new toys. Yahoo actually shut down most of the services it acquired.
Tumblr, however, would most likely not have the same fate. If Yahoo will indeed acquire the New York City-based company, it would almost definitely leave Tumblr's products and services untouched.
As previously mentioned, Tumblr just started selling ads a few weeks ago, when it introduced a mobile ad platform to allow brands to advertise within Tumblr's mobile apps. That means the company hardly monetized its huge audience so far and still has a long way to go. If Yahoo were to put all its advertising weight and know-how behind Tumblr's platform the big bucks could come rolling in no time.
"If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career - aesthetics software technology and fast-growing - you could not land on a better choice," AllThingsD cites one of its sources.
Tumblr's investors could include heavyweights such as Sequoia Capital, Union Square Ventures, Greylock Partners, Spark Capital, Insight Venture Partners, The Chernin Group and CrunchFund.
Neither Tumblr nor Yahoo commented on these reports, but such a deal could mean great things for both companies. Stay tuned for more details as they become available.
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