Is this a sign of bubbling dot-com exuberance? Reddit announced that it is raising up to $700 million in additional funding, giving the community-discussion site a post-money valuation of more than $10 billion, the company said.
The new Series F funding, led by existing investor Fidelity Management and Research Co., includes participation from other previous investors. So far, Reddit has closed $410 million in the new round and expects that to increase to as much as $700 million.
The latest financing announcement comes six months after Reddit raised $250 million, led by venture-capital firm Vy Capital, valuing the company at $6 billion. Other investors include China’s Tencent, Sequoia Capital and Andreessen Horowitz.
Reddit has said it plans to double headcount in 2021, expanding from about 700 to 1,400 employees. The company is considering an initial public offering after hiring its first-ever CFO, Drew Vollero, who oversaw Snap’s IPO in 2017.
Reddit hasn’t disclosed detailed financials and it’s not clear whether the popular discussion-forum destination is profitable. In the second quarter of 2021, Reddit notched its first quarter with $100 million in advertising revenue, up 192% year over year. It also has expanded internationally in the U.K., Canada and Australia, with “more countries to come.”
Last December, the company said it averaged 52 million daily active users in the fourth quarter of 2020.
In announcing the new funding, Reddit said that “we are making strategic investments to grow Reddit and our business, including expanding internationally, innovating new ways to foster community, and bolstering our advertising offerings and capabilities.” Reddit also has stepped up its push into video, recently acquiring Dubsmash, a short-form video app similar to TikTok.
Reddit, which once billed itself as “the front page of the internet,” currently carries the slogan “Dive into anything.” The company describes itself as “a network of communities where people can dive into their interests, hobbies and passions. There’s a community for whatever you’re interested in.”
Like other social media platforms, Reddit has been bedeviled by hate speech, harassment and other abuse. Last year, the company officially banned hate speech and disabled about 2,000 subreddits, including r/The_Donald, a notorious pro-Donald Trump forum. Earlier this year, Reddit drew scrutiny from U.S. regulators after users on the r/WallStreetBets subreddit hyped certain stocks including GameStop and AMC Entertainment, leading to volatile swings. (Reddit has said r/WallStreetBets did not violate any of its policies.)
Reddit was acquired by Condé Nast in 2006, soon after it launched in 2005. In 2011, Condé Nast spun out the site, while Advance Publications, parent of Condé Nast, retains a minority stake in Reddit.