Startup of the Week: Reddit – raising funds valuing it at $1.7 billion

This week we feature Reddit, an extremely popular social media platform that just raised additional funding, valuing the ‘startup’ at $1.7 billion. Some may find Reddit to be a no-thrills version of social news. Reddit is not a typical  small startup that we generally feature. Research firm Alexa ranks Reddit the fourth most-visited site in the U.S. and seventh worldwide.

Some of the readers may be reflecting on our earlier post “When should a Startup grow up and act like a Business?”  In case you are wondering, yes Reddit is still considered by some as a ‘startup

According to Bloomberg,  “Reddit is one of the few relics of the mid-2000s internet that has not only survived but thrived in recent years. Now venture capitalists are giving a major boost to the link-sharing website, with funding that will give the company a valuation of about $1.7 billion, two people familiar with the matter said.

In recent weeks, Reddit Inc. was looking for investments totaling about $150 million, said one of the people, who asked not to be identified because the terms are private. A spokeswoman for Reddit said no funding had been finalized, declining to comment further.

Steve Huffman and Alexis Ohanian founded Reddit in 2005 as students at the University of Virgina. They joined Silicon Valley business incubator Y Combinator and sold the startup to magazine publisher Conde Nast the next year. It attracted a devoted audience posting links to news, images and video, which fellow users vote on to rank their importance. It’s been the birthplace of countless online memes but has also drawn criticism for hosting racist, sexist and anonymous rants.”

Reddit is a community of passionate users.  Registration is simple and easy. The rather simple User Interface (UI) allows registered users to add, vote and comment on articles and post. The community is mostly self-moderated and those who voilate the rules are quickly marked out.   An interesting response to the question “What should I know about Reddit before joining?” posted on a competing Q&A site, Quora

(1) You will get used to the UI.
(2) You will get downvoted.
(3) You will discover an amazing community.
(4) You will discover amazing content.
(5) You will begin to care about useless internet points.
(6) You will lose your soul.

Steve Huffman, chief executive officer and co-founder of Reddit Inc., left, speaks as Alexis Ohanian, chairman and co-founder of Reddit Inc., listens during a Bloomberg West television interview. PHOTO: BLOOMBERG

How does Reddit make Money ?

Over the years, the web portal has grown immensely in popularity, receiving over 200 million unique visitors a month, and Reddit culture has become a very real thing. On Reddit, users, also known as Redditors, submit content that is then upvoted or downvoted according to other users’ likes and dislikes. Comment sections work in the same manner, and comments are threaded to facilitate conversations.

  • Advertising – Reddit has been selling ad space since 2009. Today, there are two ways to advertise on the website, either through managed or self-serve ads. Pricing for Reddit’s managed ads starts at $30,000, and for self-serve ads at $5.00 cost per thousand (CPM) depending on the target audience.
  • Reddit Gold – Enter Reddit Gold. This offering is a membership plan that allows users to pay for premium features. Reddit Gold currently costs $3.99 a month or $29.99 per year and can be gifted to other users.
  • Reddit Products – Reddit also makes money the way a lot of popular websites do: by selling branded products. Although the Reddit Marketplace closed in February 2015, the Reddit Market remains open and users can buy t-shirts, Snoo dolls and stickers.Read more: How Reddit Makes Money | Investopedia
Image result for reddit

Startup Bytes

Co-Founders:  Alexis Ohanian and Steve Huffman
Startup Focus:  Social media, content sharing, Q&A and web content curation
Future Plans:  The self-proclaimed “front page of the internet,” continues to attract avid followers. Research firm Alexa ranks Reddit the fourth most-visited site in the U.S. and seventh worldwide.

Startup stage and funding: Recently raised $50 million, valuing it at $1.7 billion.

Other popular social Content Curation portals like Reddit include

Flipboard –
Digg –
Quora –
StumbleUpon –
Hacker News-
Mashable –
Topix –
Voat –
Scoop –
SocialADR –
Articles about Reddit
  • Reddit Is Raising Funds Valuing Startup at $1.7 Billion – Bloomberg
  • Reddit said to be raising funds valuing startup at $1.7 billion – The Guardian
  • A Review of Reddit – Lifewire
  • Reddit: A Beginner’s Guide – mashable

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