kevin roseKevin Rose has left Digg, the news aggregation site he founded in 2004, after a few months of uncertainty over his role in the company.

Rose has begun working on a separate startup that is already close to completing an initial round of funding, according to TechCrunch. Rose launched Digg in 2004. He always shied away from being a direct leader of Digg, instead hiring Jay Adelson (who later got the boot) and most recently Amazon.com’s Matt Williams to run the company.

Digg decided to remake the site and kill a number of features, leading to a mass exodus of its users to competing news aggregation site Reddit. Traffic research company Quantcast indicates that Digg now has 8.2 million unique visitors, down from nearly 16 million unique visitors in August before the latest version of Digg was released. Reddit boasts nearly 14 million unique visitors, according to the numbers it released today.

Part of the reason Digg began to stagnate was because of poor strategic decisions during the height of the recession. Rose said he would have hired additional engineers to handle implementing new advertising features instead of reallocating engineers to other tasks, like sustaining revenue.

Google considered buying the news aggregator in 2008 for around $200 million, but the search giant walked away from the deal at the last minute. Google did not consider the team at Digg a good fit for Google after interviewing each employee individually, making it cut the deal short.

Since then, Rose was less of a direct leader of the site and more of an adviser. That didn’t stop him from intervening in the site’s activities from time to time — such as asking his Twitter followers whether or not the site should bring back its “bury” function, which pushes submitted links out of sight if they are unpopular enough.

The San Francisco, Calif.-based company has raised around $40 million to date.