Business

Reddit Ready to Take on Facebook and Google with $300 Million Rise at a $3 Billion Valuation

Reddit, on Monday, announced that it raised 300 million dollars at a valuation of over 3 billion dollars, as compared to a 200 million dollars raised at 1.8 billion dollar valuation during 2017. Tencent, the gigantic firm of China has become a newcomer in this series D round by investing about 150 million dollars and joining prior investors in the company that include Sequoia, Fidelity, Andreessen Horowitz, Tacit, VY, and Snoop Dogg. With this financing, the company says it is now planning to expand globally and grow its advertising platform, targeting the market dominated by Google and Facebook.

Steve Huffman, the Honorable Chief Executive Officer of Reddit, sat down with a popular national media house for an interview to discuss the financing and what’s next for the company. Speaking to the media officials, he said that, “One of the things that have been very important to us is that we can now assure advertisers that you are going to have a positive experience on Reddit and potentially even a new experience, a new way of connecting with customers.” He also said that Reddit’s commitment to advertisers is to make that connection free from abuse and other kinds of misbehaving.

Reddit was founded in 2005, and since then it has drawn a lot of criticism and concerns over abuse, harassment, and piracy on the platform. However, Huffman said that the company has invested in better technology to catch abuse and better tools for its users to report it. He said that the tools are fine and functioning well as of now. Reddit has grown its appeal to advertisers with 330 million monthly active users, half of them are between the ages of 18 and 24, a valuable, hard-to-reach demographic. While the company won’t reveal its revenue, it has brought in more than 100 million dollars in the last year.

Huffman said, “We are reinventing the ads business, both on the technology side and our ability to sell it and to create a friendly home for users and brands alike.” Adding to his statements, he said, “So we’ve made steady progress on all of these fronts over the last year, and we feel pretty proud of where we are. And as a result, we are seeing a lot of attention from both brands and investors.” Tencent’s investment is highly notable. Not only is Reddit blocked in China, but the platform is known as a bastion for free, unedited speech. But the investment makes more sense considering that Tencent is an investor in some of the video game companies that drive conversations on Reddit. However, Tencent games own about 40 percent of the Fortnite creator Epic Games. Tencent is also a big investor in another social service banned in China. The company became the largest shareholder of Snap in late weeks of the year 2017, and currently owns approximately 15 percent of the public company.

Huffman said, “They are investors in lots of video games companies, and video games are one category that’s popular on Reddit.” Adding to his statements he pointed out that, we are the only company at our scale that’s still a private company, so we’ve had a lot of investor attention in the last year. So we found ourselves in a good position to get something done right now. Now, with this additional financing feature, Huffman said that he hopes to take a piece of Facebook’s and Google’s massive market share in online advertising.

He said, “When we are talking about competing for ad dollars, of course, we are talking about Facebook and Google, who take up the vast majority of ad spend.” He said that when it comes to competition for consumers, Reddit is now competing with anybody, or anywhere people spend their free time. The one key to growth, Huffman said is to make the Reddit website easier for newcomers to access.

Huffman said that “When we think about internationalization, obviously that’s our largest opportunity for user growth, and are still want to get the fundamentals of Reddit working perfectly in the United States, where we understand the language and the culture, and I still think we have opportunities to do better there.”

Reflecting on a year dominated by negative headlines around Facebook and on Reddit’s own work to make its platform safe, Huffman said Reddit’s growth is predicated on eliminating the kind of abuse that can alienate users and brands. He added, “Reddit has learned many lessons over the years, and one of the most important ones is that user safety and trust is extremely important.” Adding to his statements, he said, “We’ve also seen in the last year how challenging things can be if you don’t get that right and how high the stakes are. We do believe the stakes are increasing.”

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