Facebook acquired Instagram in 2012 for about $1 billion in cash and stock, with the deal officially closing in September of that year. At that time, the company had only about 13 full-time employees and no stable revenue.

The agreement was initially valued at about $300 million in cash plus approximately 23 million shares of Facebook stock; due to a drop in Facebook's stock price after its IPO, the actual consideration at closing fell to about $715 million, with approximately $521 million in cash and about $194 million in stock.

Co-founder Kevin Systrom held about 40% of the shares, cashing out about $400 million; Mike Krieger held about 10%, around $100 million; Benchmark held about 18%, approximately $180 million; Andreessen Horowitz and Baseline each held about 10%. The employee pool, valued at about $100 million, was distributed based on tenure.

When the acquisition was announced, Instagram had about 30 million iOS users and had been online for only about 18 months, with an average of about 5 million photos uploaded daily; the Android launch saw over 1 million new registrations on the first day. Mark Zuckerberg stated that this was Facebook's first acquisition of a product with such a large user base, and it planned to operate it independently.

Systrom had previously declined an early job offer from Facebook and later pivoted Burbn into a filter photo application; Krieger came from Meebo. After the two left in 2018, Instagram remained under Meta's control, with current head Adam Mosseri reporting to Zuckerberg.

Mechanically, the buyer was Facebook, which was about to go public and needed to secure its mobile photo entry, while the seller was a small team that had not yet commercialized but whose growth curve threatened the social media stronghold. Funds transferred from Facebook's shareholders to the founders, Benchmark, a16z, and other early shareholders; the beneficiaries were entrepreneurs and VCs who seized the distribution window, while the burden fell on latecomers who could only report the transaction price and competitors who missed the target.

Analysts estimate that Instagram has contributed over 40% of Meta's advertising revenue in recent years, with global revenue projected to exceed $80 billion by 2025 and monthly active users around 3 billion, far exceeding the initial $1 billion valuation.

Source: Public Information