Reddit is one of the few relics of the mid-2000s Internet that has not only survived but thrived in recent years. Now venture capitalists are giving a major boost to the link-sharing website, with funding that will give the company a valuation of about US$1.7bn, two people familiar with the matter said.
In recent weeks, Reddit was looking for investments totaling about $150m, said one of the people, who asked not to be identified because the terms are private. A spokeswoman for Reddit said no funding had been finalised, declining to comment further.
Steve Huffman and Alexis Ohanian founded Reddit in 2005 as students at the University of Virginia. They joined Silicon Valley business incubator Y Combinator and sold the start-up to magazine publisher Condé Nast the next year. It attracted a devoted audience posting links to news, images and video, which fellow users vote on to rank their importance. It’s been the birthplace of countless online memes but has also drawn criticism for hosting racist, sexist and anonymous rants.
Despite the site’s popularity, Reddit has struggled to find a sustainable business model. Condé Nast spun the site off in 2011 while retaining a stake. Reddit spent the next few years with a rotating cast of CEOs, including Ellen Pao, who served as interim CEO amid a gender discrimination lawsuit against her former employer, Kleiner Perkins Caufield & Byers, which she lost. Pao’s efforts to reduce harassment were unpopular among some of the site’s loyallists, as was the dismissal of well-liked moderator.
In 2014, Reddit assembled a headline cast of investors from Silicon Valley and Hollywood. Joshua Kushner, Peter Thiel and Marc Andreessen joined with Jared Leto and Snoop Dogg in a $50m round, led by Y Combinator’s Sam Altman. The next year, the founders came back and shifted the company’s focus to a long-overdue move into mobile, tools for publishers and plans for generating more revenue. With Huffman now as CEO, the San Francisco company is experimenting with various advertising formats and a premium subscription service.
The design of the website, the self-proclaimed “front page of the Internet”, hasn’t changed much in all that time. The cramped text and seemingly endless comment threads can make pages difficult to navigate. Many people don’t seem to mind. Research firm Alexa ranks Reddit the fourth most visited site in the US and seventh worldwide. — Reported by Lizette Chapman, (c) 2017 Bloomberg LP