Social news platform Reddit has secured $50m (£31m) in funding from venture capitalists and investors including actor Jared Leto and hip-hop star Snoop Dogg, and is preparing to give 10% of the new shares back to the website’s users.
The fundraising comes weeks after Reddit banned “The Fappening”, a community dedicated to posting the nude celebrity photos leaked over the summer – following widespread criticism accusing the company of being slow to take action.
Yishan Wong, chief executive of Reddit, said that the timing of the closure of The Fappening and the greenlight on funding were not connected. “Fundraising cycles are much longer than nude celebrity photo cycles, and the two happened to overlap,” he said, speaking to Venturebeat. “We handled the two independently, just like we made statements around other events. If anything, I spoke with our investors before doing the final term sheet signing and told them: ‘Hey, this thing is going on, and we are going to handle it the way we always handle things. Here’s a chance to back out if you want,’ and they all stayed in. It was a nice chance to make sure they were really on board with how we do things”.
The images were originally posted on anonymous image sharing site 4chan, but The Fappening provided a home of sorts reportedly attracting more than 250m views in days. Reddit tried to shut the community, or subreddit, citing copyright issues rather than invasion of celebrities’ privacy.
The recent funding was led by Sam Altman, the president of Y Combinator out of which Reddit launched in 2004 before growing to attract nearly 115m unique users per month, with participation from Alfred Lin of Sequoia Capital and Marc Andreessen of Andreessen Horowitz.
Others who participated in the round included tech industry entreupreneur Peter Thiel. Wong said in a blog post that Reddit has traditionally operated with a “shoestring budget” which meant the company could only focus on essential features and was “always understaffed”.
The money will be used to increase the company’s 60-odd headcount, product development, build better moderation and community tools, improve its advertising product and expand Reddit’s mobile presence.
The investors involved have proposed giving 10% of their shares back to the Reddit community. While no detail is given on how this will actually work in practice, Wong says he and Advance Publications, the parent company of Condé Nast that spun off Reddit in 2011, have been looking at a way to do it “for years”.
“We’ve long been trying to find a way for the community to own some of Reddit, because it is your contributions that help to anchor the site and give it strength,” he said. “The investors in this round have proposed to give 10% of their shares back to the community, in recognition of the central role the community plays in Reddit’s ongoing success. We’re going to need to figure out a bunch of details to make it work, but we’re hopeful.”
“An investment like this doesn’t mean we’re rich or successful,” said Wong. “We have been entrusted with capital by patient, long-term investors who support our views on difficult issues. We believe in free speech, self-governing communities, and the power of voting. We find that this freedom yields more good than bad, and we have chosen investors based on this belief.”
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This article was written by Mark Sweney, for theguardian.com on Wednesday 1st October 2014 13.01 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010