Reddit, the so-called front page of the internet, has raised $50 million in Series B on a $500 million valuation with intentions to give back 10 percent of the round’s equity to the community. Somehow.
The round is led by Sam Altman, CEO of Y Combintaor, with participation from Andreesen Horowitz and Sequoia Capital, as well as individual investors like Peter Thiel, Ron Conway, Jared Leto (randomly), Josh Kushner, Jessica Livingston, Kevin and Julia Hartz, Mariam Naficy, and Reddit CEO Yishan Wong.
It’s a star-studded round, to say the least, and brings things full circle considering that Y Combinator cofounders Alexis Ohanian And Steve Huffman first launched Reddit back in 2004 out of the Y Combinator accelerator in the same batch as Sam Altman.
Update: Reddit CEO Yishan Wong has given further explanation of how the company plans to allocate equity back to the community. Enter “Cryptocurrency.”
We are thinking about creating a cryptocurrency and making it exchangeable (backed) by those shares of reddit, and then distributing the currency to the community. The investors have explicitly agreed to this in their investment terms.
Nothing like this has ever been done before. Basically we have to nail down how to do each step correctly (it is technically, legally, and financially complex), though in our brief consultation with an ex-SEC lawyer, he stated he could find nothing illegal about this plan. Nevertheless, there are something like 30 different things we have to pull off to make this work, so we’re going to try.
(Also, I know this totally contradicts what I said over here but that was before Sam proposed this plan to me, and the idea of being able to distribute ownership of reddit back to the community – a long-held dream of many of us, frankly – is important enough to try and do this)
Again, we want to emphasize that this plan is in its earliest stages right now and could totally fail (if it does, we will find another way to get the shares to the community somehow), but we are going to try it because… well, because we are reddit and we do these kinds of things.
According to the company blog post, the funding will go toward staff expansion for product development, community management, and better tools around moderation and community.
When asked about returns in a Reddit AMA, Altman said:
I’m willing to be very patient. I don’t have any particular timeframe in mind. I believe that the community is very valuable and that the value will continue to increase.
Up to the company if they want to share cashflow details, but they run the company efficiently.
An odd sidenote to the round is that the investors in this particular funding will be allocating 10 percent of their shares back to the Reddit community. Word on how this will be done is slim, but it’s possible they could crowdfund the equity through a service like Alphaworks.
With more than 5 billion monthly page views and 115 million uniques each month, Reddit is one of the biggest content sharing sites in the world.
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