Instagram attracted early funding from investors like Benchmark Capital despite having no clear revenue model by demonstrating strong user growth and engagement. The founders met with dozens of VCs to share their vision of building the world's best photo sharing app and Benchmark was impressed by their focus on user experience. After raising $500,000 in seed funding, Instagram continued gaining users rapidly and was acquired by Facebook for $1 billion just two years later, delivering huge returns for its early investors who believed in the founders' vision.