Ello raises $5.5 million to build its back-end infrastructure

Ello has raised US$5.5-million in new venture funding, according to CEO Paul Budnitz. Even with the funding, Budnitz insists that Ello’s ad-free ethos will be maintained. Investors have been made to sign a letter, he says, committing to Ello’s ethos.

“This company will never have ads and will never sell user data,” says Budnitz. “We’ve basically enshrined, in the most powerful legal way possible, our mission into the company.”

Budnitz says the money will be used on product development, focusing on building the back-end infrastructure that can support the growing user base. This is especially important if Ello wants to run smoothly. Having jumped from 90 total users in early August to thousands in matter of weeks, at one point gaining 40 000 to 50 000 new invite requests per hour, Ello has to increase its capacity to handle large numbers of users.

Only a few months ago, Ello, the ad-free social network, was in a comma, dying from obscurity and then suddenly it picked up users. It was as if there was some virus that infected everyone, convincing them that they had to go join Ello. There has been many guesses at what caused the traction on Ello, none of them definite.

Budnitz admitted that at times, Ello’s servers weren’t able to handle the traffic and the company had to freeze signups.

The company hopes that the new funding will help fix that. Budnitz says the deal came together quickly given the unexpected growth. The plans to seek funding says Budnitz have always been there but with the sudden growth of users, they had to be made urgent.

The round was led by Foundry Croup in Boulder, Colo with a number of additional institutional and individual investors, including another Boulder based firm Bullet Time Ventures.

The CEO says that Ello has over one millions users with an additional three million on the waiting list. Something that has not gone unnoticed by investors.

“As you can imagine, I’ve had, like, every VC in the nation in my inbox trying to invest in Ello,” he says.

Ello is quite adamant about remaining ad-free such that the co-founders have converted the company into a public benefit corporation in Delaware. What this means is that while the company aims to make money, it prioritises and provides a benefit to society alongside its obligation to maximise profits for shareholders.