Why is Scribd so hot?

Last couple of days from many different sources we have been hearing about this little company called Scribd. A funding frenzy is taking place around the company, with some of the top name venture capitalists jostling to invest in the company. There has been talk of an acquisition offer as well.

What we have heard from multiple and reliable sources that the company was offered $5 million on a post money valuation of $10 million, but passed on that offer. Someone offered to buy them but for now our sources say that Redpoint Ventures has invested a substantial amount of money at twice the valuation of the initial offer.

We asked Chris Moore, a partner at Redpoint Ventures, about all the hoopla, and he offered a “no comment.”

Scribd had previously raised about $300,000 in seed funding, on top of $12,000 it received from Y Combinator. What is Scribd anyway? As per their FAQ:

Scribd lets you publish and discover documents online. It is like a big online library where anyone can upload. We make use of a custom Flash document viewer that lets you display documents right in your Web browser.

Part of the idea behind Scribd is that everyone has a lot of documents sitting around on their computers that only they can read. With Scribd we hope to unlock this information by putting it on the web.

The technology behind the company is pretty impressive, and the traffic growth according to Compete.com and Quantcast has been pretty impressive. though one has to wonder if it merits such high valuation. A sign of the times?