Venture Capital: Reddit Cashes In On GameStop Publicity; Raises $250M
In its first Super Bowl commercial, Reddit lauded communities and underdogs.
Reddit announced in a blog on Monday that it nabbed $250 million in Series E funding from existing and new investors. The Wall Street Journal said the round, led by Vy Capital, valued Reddit at $6 billion. That’s twice the valuation of $3 billion after its previous funding round in February 2019. Andreesen Horowitz and Tencent Holdings are also investors in the platform.
Timing the deal
“We decided that now was the right opportunity to make strategic investments in Reddit including video, advertising, consumer products, and expanding into international markets,” Reddit said in its blog.
The messaging platform was in the eye of the recent retail frenzy surrounding Gamestop (NYSE: GME). That incident, and its burgeoning user base stemming from the coronavirus likely stoked investors’ interest, as well, its valuation.
Reddit said it now had 50+ million daily users, and that advertisers responded positively to the authenticity of its community. Direct advertising revenue surged 90% year-on-year during the last quarter.
The company also recently acquired short-form video platform Dubsmash to enhance its video offerings.
It now plans to double the number of its employees. “It’s surprising not only for the pace of growth but also that such a relatively lean team has been behind one of the most visited websites in the world,” Reddit said.
Speaking to the WSJ, Reddit Chief Executive Steve Huffman said the market was ripe for a fundraise, and that valuations were very high.
“It never hurts to raise money when there’s an opportunity to do so and Reddit had a strong year,” Huffman commented.
Super Bowl Ad
Reddit also scored a coup with its out-of-the-ordinary, 5-second Super Bowl ad that piqued attention with its blink-and-you-miss-it quality.
The hit ad made a veiled reference to the Gamestop fracas, saying: “One thing we learned from our communities last week is that underdogs can accomplish just about anything when they come together around a common idea.”
Related Story: Robinhood Rides Gamestop Tumult To $3.4B Debt Financing
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