It's Now Clear Tumblr Was Burning A Lot Of Cash, And It Would Have Run Out If Yahoo Hadn't Swooped In
Charlie Rose
Back in April, Business Insider heard Tumblr was trying to do just that.
(Startups are frequently acquired while in the process of fundraising. Instagram, for example, was purchased just days after it closed a $50 million round of financing.)
According to a recent SEC filing, Tumblr only had $16.6 million left in the bank when it was acquired in May 2013.
Tumblr's last fundraise was an $85 million round in September 2011.That means, regardless of the revenue it generated, Tumblr lost $68.4 million over the course of 20 months. That also means at some point, Tumblr was burning multiple millions per month, although it's unclear if that burn rate was curbed by the time Yahoo acquired it.
That sounds high, but when you have billions of monthly pageviews it gets expensive to keep servers up and running. Tumblr had 300 million monthly uniques, 60 billion U.S. pageviews and 175 employees when it sold. Tumblr was said to spend $25 million last year and was expected to spend $40 million this year. It raised a total of $125 million since its founding in 2007.
We don't know how much revenue and expenses were at the time of the sale, but it's safe to assume the company was burning a healthy amount of cash. Without Mayer, Karp had to raise another big fund, or figure out how to make money in a short period of time.
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