Back in September, we reported that eBay was attempting to sell off StumbleUpon, the website recommendation service it bought for $75 million in 2007. That didn’t happen. And now the company has been spun off to start life over as an independent startup, backed by new investors and the original founders.
The new company is led by co-founder Garrett Camp, who now steps into the CEO role. Co-founder Geoff Smith also joins Camp in returning to lead the company, but in an unannounced role. The company is backed by Sherpalo Ventures, Accel Partners, and August Capital. David Hornik from August Capital and Sameer Gandhi of Accel Partners join the board.
“The company is amply funded. And everyone is glad that the company is away from eBay,” a source tells us. eBay had previously been looking for a minimum of $75 million for StumbleUpon. It’s likely the spin out valuation was significantly lower than that. Our understanding is that Sequoia placed a competing bid, but Camp and investor Ram Shriram went with Accel and August Capital.
It’s not clear if eBay maintains a stake in the company, but that seems fairly unlikely. Really, its interest in the company never made a lot of sense in the first place. StumbleUpon is a way for users to find interesting sites throughout the web. While eBay certainly could have used that technology to find interesting things on its site, it never did that.
And StumbleUpon’s traffic has been falling in the past year. In February 2008, the site was at 2.6 million unique visitors. But in February 2009 that number was down to 1.4 million, according to comScore (chart below). Of course, traffic numbers are a bit odd to use with StumbleUpon because the service doesn’t require that you visit its actual site if you use its popular web browser toolbar. But last year it launched a frame-based toolbar that kept you on the StumbleUpon domain in a way similar to what Digg is now doing with the DiggBar.
Similarly, just as the DiggBar allows users to shorten URLs, StumbleUpon had been working on a way to do this using the Su.pr domain.
This news comes at a time when reports are circulating that VoIP company Skype’s founders are also trying to rip it back out of the hands of eBay. That may be a bit more complicated as eBay bought Skype for a cool $3.1 billion back in 2005.
In its former life as a startup, StumbleUpon raised a $1.5 million seed round of funding in December of 2005.
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