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Wattpad pulls in $3.5 million in new investment

Wattpad, the Toronto-based Internet company that allows readers and writers to connect and share their work online, has completed a new round of funding, including an investment from Union Square Ventures, the New York company whose online investments include heavyweight websites such as Twitter, Tumblr, and Foursquare. The investment from Union Square is part of $3.5 million for Wattpad that also includes money from Toronto’s Golden Venture Partners and Vancouver’s W Media Ventures, which has worked in the past with AbeBooks.

Although Wattpad clocked its one millionth user this past summer, a company press release states that the additional capital will allow the company to grow even more quickly:

We can hire more great people to create an even stronger mobile presence and user experience … We think we’re in a great position to fully take advantage of the growing number of mobile users, social networks, the rise in eReading, the global Internet, and cloud services to continue to build Wattpad into the best platform.

Calling it “the world’s most popular ebook community,” the W Media Ventures website predicts that Wattpad will have “the same disruptive effect on reading and creating books that AbeBooks had for finding and buying hard-to-find books.”

For the past decade the book industry has been pretty sheltered from the disruption the music and the film verticals have seen. But this is about to change dramatically. The distribution of books is rapidly moving digital as eReaders have gone mainstream. And now we can see for the first time how social is impacting the way books are created and consumed.

Citing the trend toward “disintermediation,” Union Square partner Albert Wenger, who will now sit on Wattpad’s board, says the Wattpad community removes traditional barriers keeping artists from reaching a larger market:

With [the Internet] story tellers can both reach the largest possible audience and can do so without intermediaries. While they can do so using blogs and web sites those aren’t ideally suited to stories (e.g., blogs tend to run backwards) and don’t form a larger community dedicated to stories as each author has to build their own community.

Whether the push toward disintermediation will supercede the role of publishers and editors, who have traditionally been charged with quality control, is an open question, but it appears to be one that Wattpad and its investors are willing to spend quite a bit of money interrogating.