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Allen Lau CEO and co-founder Wattpad, a new form of collaborative entertainment that connects readers and writers across storytelling photographed at his offices on Yonge St., Toronto April 18, 2012.Fernando Morales/The Globe and Mail

Wattpad, a Toronto-based company that allows writers to self-publish their work for free, has drawn the attention of big name Silicon Valley financiers.

Wattpad announced Wednesday that it has raised $17-million from San Francisco's Khosla Ventures and the likes of Jerry Yang, a co-founder of Yahoo! This new money has come in less than a year after Wattpad raised $3.5-million during its first round of financing, when it attracted Union Square Ventures, the New York-based venture capital firm behind big names like Twitter and Zynga,

The new backers like Wattpad because it offers fresh ideas to a publishing sector that has been upended, and its users are highly engaged, offering feedback to each other on their work. In case you haven't noticed, engaged and communicative users -- think Twitter -- are all the rage.

Wattpad has also put up impressive numbers. Time spent on the site has jumped to 1.5 billion minutes a month, which is on par with Pinterest and double what it was just six months ago, according to chief executive officer Allen Lau, and the company's mobile apps and website bring in eight million unique users each month.

Mr. Lau said in an interview that his firm wasn't exactly desperate for cash, and given Wattpad's success to date, he could be picky with backers. For those reasons, he only went to Silicon Valley firms, and he said he could count the number of funds he talked to on one hand. "It's not just the money," he said. "We want to find the right partner."

Now that the funds have been raised, Wattpad can get back to amassing more and more users. Mr. Lau said that his backers are not asking him to monetize just yet, but that doesn't mean he hasn't thought about the future. "We have a few ways to monetize, but we haven't quite flipped the switch," he said, without offering any details on these plans, likely for competitive reasons.

However, getting more users may not be as easy going forward. Out of the blue, Kobo has just made itself a direct rival to Wattpad by announcing a new self-publishing portal for authors.

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