Reddit, the consumer Internet virtual marketplace, has raised $ 410 million in new funding, valued at more than $ 10 billion, the company said Thursday.
The funding, which was led by Fidelity Investments, increases Reddit’s valuation from the $ 6 billion it reached six months ago when it raised $ 250 million. Reddit said it expects existing investors to join the latest funding, so the round is likely to grow and close at around $ 700 million.
The final funding wasn’t planned, but “Fidelity made us an offer we couldn’t refuse,” said Steve Huffman, Reddit’s co-founder and chief executive officer, in an interview.
The company then decided that the capital would give it more time to decide when and how to go public. “We’re still planning to go public, but we don’t have a set schedule for it yet,” said 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 advertisements that appear in the feeds of users who browse the many “subreddits” or themed forums across the site.
However, Reddit has to compete against digital advertising giants like Google, Facebook and Amazon, as well as against other ad-based social networking sites like Twitter, Snap and Pinterest.
“We grew up in the shadow of Facebook and Google and had to fight for pretty much every dollar we make,” said Huffman.
Still, he said, the company’s promotional products have started to work better. Reddit exceeded $ 100 million in revenue in a single quarter for the first time this year, up 192 percent over the same period in 2020.
More than 50 million people visit Reddit every day, and the website has more than 100,000 active subreddits. While it previously had a laissez-faire approach to free speech, Huffman has spent the past few years revising Reddit’s guidelines and making it harder for trolls to overrun the forums.
The company will use the new funds to improve product features and focus on how to make it easier for newbies to explore and quickly understand the site, Huffman said. Reddit is also improving its video products for more advertising. And the company is building its self-service advertising system that could appeal to small and medium-sized advertisers.
Reddit is also focused on international expansion. Most of the site is US-centered, Huffman said – something he hopes to change.
“The first priority for the product is making Reddit just great,” he said. “We want to develop the best for new users because over time it will be the best for everyone.”