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Reddit’s new funding round very likely, but it’s not about the cash

Posted By Nur Bremmen: Staff reporter On January 10, 2013 @ 6:00 am In News | Comments Disabled


Yes Reddit really is going on the search for a new round of funding. And yes, it really is at a US$400-million valuation. The funny thing is, it’s not really looking for money.

According to AllThingsD [1], the site is only looking for around US$1-million. In Silicon Valley terms that’s not all that much. A middling startup would happy with that kind of funding, sure, but why should a site that bills itself as “the front page of the internet”?

The clue isn’t that it’s looking for the money though, it’s who it’s looking to get cash from. The site is only targeting certain influential angel investors. If Reddit was cash-strapped, that would seem incredibly odd.

But it’s not. As AllThingsD notes, it still has around US$18-million of the US$20-million it got when parent company Conde Naste spun it off as a separate entity. The money then is just a token for what the company is really looking: investor buy-in and input from Silicon Valley’s elite investors.

If nothing else, the move shows that Reddit CEO Yishan Wong — in the job less than a year [2] — still has enough sense not to think that his is the only path for saving Reddit.

If he finds the right investors, with the right ideas then his hope is that Reddit will eventually become a company that can “use technology to do truly great things” may well come to fruition. Anyone investing will also have to really be into the company.

The US$1-million investment being asked for isn’t going to offer them the same spectacular returns that a boom startup might, but with the right business plan Reddit could be a real, and consistent, money spinner.

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URL to article: http://memeburn.com/2013/01/reddit-confirms-new-funding-round-but-its-not-about-the-cash/

URLs in this post:

[1] AllThingsD: http://allthingsd.com/20130109/reddits-funding-round-is-for-real-and-its-only-for-angels/?utm_medium=referral&utm_source=pulsenews

[2] less than a year: http://memeburn.com/2012/03/new-reddit-ceo-sends-out-first-public-message/

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