Ebay acquires StumbleUpon for $75M

updated

Auction giant eBay has acquired StumbleUpon, an San Francisco company that helps people “stumble upon” and share new sites related to their interests, for about $75 million.

In a statement this afternoon, eBay said the acquisition will give it “exposure to a fast-growing community-based service” that has around 2.3 million users, and that StumbleUpon is attractive because it shares similarities with eBay’s concept of community.

The deal size is not large relative to other deals we’ve seen lately, but it is a big coup for the founders, who moved from Canadian to San Francisco more than a year ago, and were self-funded until March of last year. They raised a round of $2 million or less (update: $1.5 million, we’ve confirmed) from Google’s founding investor, Ram Shriram, Lotus founder Mitch Kapor, Topic founder Ariel Poler, angel investor Ron Conway. (Update: First Round Capital also invested.)

Indeed, they reap a massive profit, something that most start-ups taking venture capital can not afford to do. Companies like Digg, for example, are rumored to be valued by venture investors at more than $75 million. Because VCs have bought shares at such a high price, they won’t let a company sell at such low levels.

The StumbleUpon deal was expected, rumored by several sources, and the price was reported accurately by the WSJ earlier this month.

Once people download is toolbar, StumbleUpon shows you Web sites that you can rate as good or bad. It starts showing you more of the types of sites you appear like, based on those sites have been rated highly by other people that have voted similar to the way you have. It does the same for videos, people and product information.

It makes money by showing an ad every hundred or so stumbles.

With no marketing, the StumbleUpon community has grown 150 percent from last year and
delivers some five million new recommendations a day to its user base, the company said.

As mentioned earlier, StumbleUpon could potentially let people stumble upon eBay products they’ve bought in the past, though the eBay did not mention this in its statement.

StumbleUpon launched in 2001, but only recently caught on in a major way.