A “Hole-Filler” Gets Funded: TweetPhoto Raises $2.6 Million

The new conventional wisdom is that photo-sharing systems built around Twitter are toast.

But don’t tell that to the TweetPhoto team. The San Diego-based photo service, which is indeed built around Twitter, has just raised $2.6 million, led by Canaan Partners, supported by Anthem Venture Partners and Qualcomm (QCOM).

The series A funding certainly seems a bit more fraught than it did about a week ago. Since then, Twitter appears to have decided on a build/buy strategy for some functions it previously allowed third-party developers to handle.

And if you believe that Twitter investor Fred Wilson’s “hole-filling” blog post is a road map, then Twitter is set to run its own photo service sooner than later.

If so, the money TweetPhoto just raised makes it unlikely that Twitter will buy the start-up because it’s now a much more expensive acquisition. And you can say the same thing about YFrog, the Sequoia-backed photo service whose parent company, ImageShack, has raised $11 million.

So if you follow that logic, Twitter will either buy TwitPic, which is the most popular Twitter-centric photo service (and one that hasn’t raised venture funding)–or build its own.

TweetPhoto CEO Sean Callahan says his service will survive whatever Twitter does because it can work well with other social networks, like Foursquare and Facebook. And Deepak Kamra, the Canaan partner leading the investment, says that his team knew Twitter would want to do more of this stuff on its own, and planned accordingly.

“I think there’s a lot of fear uncertainty and doubt for the next 6 months or so. Which also creates opportunity,” Kamra said.

But even if Twitter hadn’t roiled the waters last week, TweetPhoto–and all the other photo uploading services–wouldn’t have smooth sailing. All of the services boast big traffic, but it’s expensive to host all those photos, and it’s hard to sell ads against those pages.

Meanwhile, do you know which photo service you use to push pictures to Twitter? It turns I out I use TweetPhoto, because that’s the default photo service on both TweetDeck and SocialScope, my two primary Twitter platforms. But I had to look it up to find out.

Callahan says he can lure more developers and distribution because his API is more robust than his competitors. And he says his new funding will allow him to experiment with revenue models. One idea: Charge other publishers for the right to use his users’ images as stock photos.

I think that one poses a bunch of problems. For instance, what do you do with the weird images I’ve uploaded?

But Callahan says he now has time to figure it out. “We’re going to throw a bunch of stuff against the wall and see what sticks,” he says. “That was the purpose of doing the series A.”