If you read the TC article on the investment you'll see where they plan to spend it: http://www.techcrunch.com/2008/01/30/etsy-raises-27-million-...

—Buy $5 million worth of hardware and hosting over the next two years.

—Support more currencies and languages other than the U.S. Dollar and English.

—Fix the checkout system (there is none now, every buyer has to pay every seller on an individual basis. There is no Etsy payment system that works across all sellers).

—Fix search.

—Provide a cushion in case of a recession.

—Offer customer service

—Provide competitive wages and take care of his employees.

Quite a lot of big ticket items in that list. Add to that any significant amount of consumer marketing and the number doesn't seem that bad.