URL shortening service Bit.ly raises $10mn in VC funding

The popular Internet-based URL shortening service, Bit.ly, has reported via a blog post that the company has raised $10-million in a new Series B venture capital around of financing.

This latest round was led by RRE Ventures, and included previous investors including the Founders Fund, Alpha Tech Ventures, among other venture capitalists and angel investors. AOL Ventures also participated in the financing for the first time.

Many people wonder how the company generates revenue, and at first glance, it might not be very clear.

 The firm offers a monthly premium service that allows firms to automatically create and manage customized short URLs for their online content via bit.ly at a cost of $1,000 per month.

Current clients include Yahoo, and Microsoft, and The New York Times, among others.

Bit.ly currently has about 4,000 clients signed up to automatically create short URLs, but only a handful actually pay the extra premium to handle more links with the more advanced analytics dashboard.

The company says it is currently serving about 6-billion URL clicks each month, and the company hopes to create data mining partnerships, like with the world’s largest search engine, Google, in order to create additional revenue.

It is important to note that Twitter has ended its partnership with Bit.ly, and the service is no longer the default URL shortener on the popular social network, but Bit.ly still grew despite ending the Twitter partnership.

The company previously raised $4-million in venture funding.