Path Raises $8.5 Million For 2 Million Shared Items... $4 For Every Share!
Path, the social networking site founded by ex-facebook executive Dave Morin, Napster co-founder Shawn Fanning and Dustin Mierau, has raised $8.65 million in venture capital funding from Kleiner Perkins Caufield & Byers and Index Ventures. Kleiner's Chi-Hua Chien and Index's Mike Volpi will be joining Path's board as a result of the funding. The current round of funding brings the total money raised by Path to $11.2 million.
Path, the social networking site founded by ex-facebook executive Dave Morin, Napster co-founder Shawn Fanning and Dustin Mierau, has raised $8.65 million in venture capital funding from Kleiner Perkins Caufield & Byers and Index Ventures. Kleiner’s Chi-Hua Chien and Index’s Mike Volpi will be joining Path’s board as a result of the funding. The current round of funding brings the total money raised by Path to $11.2 million.
Path is a mobile social network, that allows users to share photos and short videos (moments) with friends. The friends list however, can only grow to a maximum 50 connections. The rationale for restricting the friends list to 50, according to Path is that only a handful of people are our friends in reality. The company also disclosed that more than 2 million moments have been shared across Path by its members.
To many in the blogging community the investment from Kleiner and Index has come as a surprise. According to Om Malik:
That’s a lot of money for a company that has yet to gain any visible traction or even have a hint of a business model. I personally have a terribly low opinion of the application and the service, which has been thoroughly thrashed in the market by the likes of Instagram. The company has done nothing to really change my mind. Path’s unique selling proposition is that it allows you to share photos privately with 50 of your close contacts – friends and family so to speak. Since their initial launch, the company has launched ability to share 10-second video clips. The photos, videos and text are shared as “moments.” The company claims hundreds of thousands of users who have shared 2 million moments. Assuming there are 100,000 Path users, then that works out to about 20 moments per user. And if there are 200,000 users, the number declines to 10 moments per user. That’s not a lot of activity on the system.
Path would have had a hard time raising one-tenth of this amount with a different founding team. It seems that Kleiner Perkins and Index are betting on the team, rather than the product – which is not a bad strategy at all. But given the crowded nature of the market, $8 million seems to be a bit too much for 2 million shared moments. What exactly does that mean ? $4 for every shared moment on Path. I thought Kleiner and Index were better than this.
