Imgur announced today it raised $40 million in a Series A round led by Silicon Valley venture capital firm Andreessen Horowitz.

Imgur

The deal would involve Andreessen Horowitz general partner Lars Dalgaard taking a seat on Imgur’s board.

Imgur’s background

Imgur (pronounced “Image-er”) was put together in 2009 by Alan Schaaf, a student at Ohio University in Athens, who undertook the effort as a gift to Reddit, whose photo sharing applications didn’t meet his standards. However, somewhat ironically given the genesis of Imgur, the company’s growth has outpaced that of Reddit. Last September saw Imgur hit the 100 million user mark, while Reddit claimed 85 million users each month. Imgur had a mere 30 million users at the beginning of 2012.

It was reported Yahoo! Inc. (NASDAQ:YHOO)’s CEO Marissa Mayer may be looking at her 25th acquisition last year. Reports have been doing rounds that Yahoo and Marissa Mayer are looking at the ‘cool’ image sharing site Imgur, a company with which Yahoo! Inc already has a relationship in place.

Alan Schaaf hadn’t taken any venture capital money for Imgur. Venture capital firms have been drooling over it. Imgur is a tremendously social site, something that boosts the sale price tremendously. Moreover, it has revenue and users in place already.

Valuation tops $200 million

According to people familiar with the matter, Imgur received a valuation of about $200 million. Founder and Chief Executive Alan Schaaf said his company had resisted taking outside investment, having been profitable from its start five years ago, despite being hounded by more than a dozen venture capitalists and angel investors. Schaaf said his team decided the time was now right for funding in order to speed up growth, develop new products and grow the reach of its service around the globe.

Although Imgur has taken meetings with investors in the past, Andreessen Horowitz was the first firm Schaaf ever pursued. He had heard good things about them from friends, and was flattered when the firm’s partner, Netscape founder Marc Andreeseen, told him he was an Imgur user and fan.

Imgur now has 13 employees, and 4.5 billion monthly pageviews. Reddit, where the photo utility was first introduced and quickly adopted by users, is still photo sharing site’s largest traffic driver. Facebook is Imgur’s second-leading referrer.