Community news sharing site Reddit might be raising upwards of $50 million in a new funding round that includes investments from Andreessen Horowitz, Sequoia Capital, and others.
The funding — first reported late last night — wouldn’t be unheard of for a site with as much traction as Reddit, which currently brings in over 5 billion page views and nearly 115 million unique visitors per month. Still, the biggest problem with Reddit is that its powerful user community usually rejects traditional methods that a company of its size would use to make money, making ad network revenue and sponsored promotions more difficult. The last thing Reddit wants to do is alienate that community, which is why it probably needs a fresh round of investment to find ways to make money that keep everyone happy.
The news sharing site initially launched as a Y Combinator company and was eventually sold to Conde Nast, which in turn ended up spinning it off into a separate entity. In the last few years Reddit has also beefed up its leadership team, adding former Facebooker Yishan Wong as CEO and recruiting former Kleiner Perkins partner Ellen Pao, among others.
Despite the injection of talent, Reddit has, however, remained unable to turn a significant profit. This is true even though the company has hired several new employees to beef up its ad sales, increased its efforts to drive revenue through its online store and premium Reddit Gold subscription service, and enjoyed a steady rate of traffic growth. If the new funding is true, it’s likely that Reddit has identified more ways to grow the business than it has the money to pay for.
Recently, the company released a new standalone Reddit AMA app that singled out the site’s popular “Ask Me Anything” subreddit, which allows Reddit users to ask questions to notable folks in the community. It also just launched a new liveblogging tool that’s proved popular, as VentureBeat previously reported.
As for the deal, the $50 million round would be for about 10 percent of Reddit, according to Re/code’s sources. That would give the company an estimated $500 million valuation. Last year Reddit was also rumored to be raising a funding round, just $1 million for a $400 million valuation. Investors included in the alleged new round would likely include Andreessen Horowitz, Sequoia Capital, and even Reddit cofounder Alexis Ohanian, who rejoined Reddit as a board member years ago.
The inclusion of Andreessen Horowitz to the funding round is particularly interesting because the venture firm hasmade a series of big investments in media companies in the last year, including a $50 million round for viral content site Buzzfeed and a $40 million round for image sharing community Imgur.
VentureBeat is reaching out to Reddit and other sources for more details on the potential funding round. We’ll update this post with anything new we learn.