Instagram, the mobile image sharing app, is rumored to soon secure $40 million in financing. The new round of investors would bring the company to a total value of $500 million. The Wall Street Journal cited sources familiar with the matter when they broke the news today, stating that the new valuation will put the company at roughly 20 times its worth a year ago. The last time Instagram raised funding was in February of 2011, when the startup received $7 million in Series A funding.

The image sharing app allows iPhone users to put vintage filters on their photos and upload them to social networking websites, and the service currently has more than 15 million users. Last year Instagram came out with a 2.0 version of their popular app, which introduced live filter viewing, a tilt-shift feature, and added four new filters. Instagram was Apple’s iPhone app of the year in 2011, beating out mega hits like Angry Birds and Plants vs. Zombies. In August of 2011 the company announced 150 million photos had been uploaded through their service.

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Instagram is currently only available on Apple’s mobile platform, though the company is working on a version for the Android OS to be released sometime in the future. The app has been free from day one, and has some investors worried about Instagram’s ability to create a serious profit. So far the start-up has been working with companies like Urban Outfitters and Marc Jacobs to create promotional accounts within their app, but with the service available free of charge and containing very little ad space, some investors may be left cold on the idea of supporting the popular app.

In an email to the WSJ, Instagram’s chief executive, Kevin Systrom, declined to comment on financial speculation.

The startup is currently at SXSW in Austin this week, where its team members will be holding panels, photowalks, and live performances by RAC, Wallpaper, and The Shins.

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