This is an unusual round of financing, as the content-sharing site expects investors to give 10% of their shares to its user community.
The information sharing site Reddit has announced that it has raised $50 million from Sam Altman, president of Y Combinator, where Alexis Ohanian and Steve Huffman launched Reddit in 2004 at the same time that the future boss of the start-up accelerator launched his own. The investment funds Sequoia Capital and Andreessen Horowitz are also participating. It’s not a classic round of financing, however, as investors are expected to give back 10% of their shares to the site’s user community, to thank them for their central role in its success.
The terms are not yet decided, but this donation could take the form of a new alternative currency. “We’re looking at creating a cryptocurrency and making it tradable with these Reddit shares, and then distributing that currency to our community,” says the site’s CEO Yishan Wong. The investors have given their approval for this.” Indeed, one could imagine users receiving Redditcoins commensurate with their contributions to the site and being able to exchange 1,000 Redditcoins for one share. The startup still needs to resolve a number of technical, legal and financial issues before it can proceed with this. But if it succeeds, it could inspire other companies to do some very interesting financial transactions.
Claiming over 5 billion page views and 115 million unique visitors per month, Reddit is one of the largest content sharing sites. It plans to use the funds raised to expand its workforce – currently 60 people -, work better with third-party developers, improve its moderation and community management tools, and develop its mobile application, among other products.
Also participating in the round were Peter Thiel, Ron Conway, Paul Buchheit, Jessica Livingston, Mariam Naficy, Josh Kushner, Kevin and Julia Hartz, actor Jared Leto, rapper Snoop Dogg and Reddit CEO Yishan Wong. The deal values Reddit at $500 million.