Reddit, the virtual town square of the consumer internet, has raised a fresh $410 million (€350m) in funding, valuing it at more than $10 billion, the company said on Thursday.
The financing, led by Fidelity Investments, increases Reddit's valuation from the $6 billion it achieved six months ago, when it raised $250 million. Reddit said it expected existing investors to participate in the latest financing as well, so the round is likely to grow and close out at about $700 million.
The latest funding wasn't planned, but "Fidelity made us an offer that we couldn't refuse", said co-founder and chief executive Steve Huffman. The company then decided the capital would give it more time to decide on when – and how – to go public.
“We are still planning on going public, but we don’t have a firm timeline there yet,” said Mr Huffman. “All good companies should go public when they can.”
The move gives Reddit more of a war chest to build its business and attract new users. The company makes most of its money selling advertising, which appears in the feeds of users who browse the many “subreddits” or topic-focused forums, across the site.
But Reddit must compete against digital advertising giants like Google, Facebook and Amazon, as well as other ad-based social networking sites, including Twitter, Snap and Pinterest. "We've grown up in the shadow of Facebook and Google, and pretty much every dollar we make we've had to fight for," said Mr Huffman. Still, he said, the company's advertising products have begun to work better. Reddit surpassed $100 million in revenue in a single quarter for the first time this year, up 192 per cent over the same period in 2020.
More than 50 million people now visit Reddit daily and the site has more than 100,000 active subreddits. While it previously had a laissez-faire approach to free speech, regardless of toxicity, Mr Huffman has spent the past few years overhauling Reddit’s policies and making it more difficult for trolls to overrun the forums.
Improving product features
The company will use the new funds to improve product features, focusing on how to make it easier for newcomers to explore and quickly understand the site said Mr Huffman. Reddit is also enhancing its video products with an eye toward more advertising. And the company is building its self-service advertising system, which could help appeal to small and medium-size business marketers.
Reddit is also focused on expanding internationally. Most of the site is US-centric, said Mr Huffman – something he hopes to change. “The first priority on the product is just making Reddit awesome,” he said. “We want to build what is best for new users, because over time it will be best for everyone.” – The New York Times