Reddit has confirmed it raised $50 million in in Series B funding and will use 10 percent of the equity to distribute it with community members.
Reddit, known as “the front page of the Internet”. It was once a division of Conde Nast, and three years ago it spun off and become its own independent entity. Since then it has operated with a “shoestring budget” and has claimed to be “always understaffed”.
According to a post on Reddit’s blog:
“We’re planning to use this money to hire more staff for product development, expand our community management team, build out better moderation and community tools, work more closely with third party developers to expand our mobile offerings (try our new AMA app), improve our self-serve ad product, build out redditgifts marketplace, pay for our growing technical infrastructure, and all the many other things it takes to support a huge and growing global internet community.”
The striking thing about what Reddit plans on doing though is giving a portion of the money raised to its users. It’s not yet clear how the company will distribute the money to its users, although its thought that it will use a block chain method – similar to systems that create and distribute Bitcoin.
Its lead investor is Sam Altman, who is the President of Y Combinator, the incubator that helped launch Reddit, led the investing round along with Josh Kushner, Peter Thiel, Ron Conway, Calvin Broadus Jr., Jared Leto, Jessica Livingston, Paul Buchheit, Kevin Hartz, Julia Hartz, and Mariam Naficy.
An incubator is a company that helps startups and early-stage businesses through their developmental stage. We also call it an incubator firm or incubator business.
Altman said:
“I went through YC the same class as Reddit, and so I was one of the first dozen or so users. My thought at the time was these community sites should own themselves. For years I couldn’t think of a great way to do that.”
He added that it was time for Reddit to try out something new:
“The block chain came along and I thought, huh, this might the biggest evolution of corporate structure since the limited-liability corporation. So we don’t know exactly how it will work yet, but all the investors are committed to allocating these shares to the community if we can find a way to make it work.”
Reddit CEO Yishan Wong, said:
“An investment like this doesn’t mean we’re rich or successful … Money can become worthless very quickly, value is something that is built over time through hard work.”