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SAN FRANCISCO – Fresh off a winning Super Bowl ad and a role at the center of a recent stock market frenzy, Reddit announced on Monday that it had raised $ 250 million in new funding, valuing the start-up from social news to $ 6 billion as it wants to boost user growth and double its workforce.
This investment is an opportunity for Reddit, which since 2003 has focused on creating digital communities around thematic bulletin boards. The latest funding, led by Vy Capital with the participation of previous investors like Andreessen Horowitz, Sequoia Capital and Tencent Holdings, doubles Reddit’s valuation compared to its last funding in 2019.
Reddit, which is based in San Francisco, said the funding hinged on the success of its booming advertising business, as brands and marketers are drawn to the site’s powerful and active members of the community.
“We’ve come a long way in recent years to focus more on the needs of the hundreds of thousands of communities that make up Reddit,” the company said in a blog post. “We dedicated ourselves to Reddit because we believe in the power of communities that make a sense of belonging and connectedness as real as the ones we create offline.”
Reddit has been very visible in recent days. Shares of video game retailer GameStop soared last month as users of Reddit’s WallStreetBets forum, known as the “sub-reddit,” encouraged each other to buy the stock, in part to trap the hedge funds that had bet the stock would fall.
This sent the action of GameStop into an extraordinary and volatile race. After a wave of media attention, the WallStreetBets forum has reached over seven million members. Several option rights to books and films have been purchased over the course of the saga, with the prospect of fame and money leading the forum moderators to bitter arguments.
Reddit has also been widely praised for a five-second commercial that aired Sunday during the Super Bowl, which has become one of the most talked about commercials of an ad-filled day people talk about. The Reddit spot, which required viewers to pause their TV screens to read it, proclaimed, “Wow, that really worked.” Viewers rushed to take screenshots of one of the shorter Super Bowl commercials to post on social media.
Reddit has had its share of controversy over the years. The company has long been criticized for its laissez-faire approach to content moderation, which has allowed racist, sexist and troll-filled communities to flourish. At one point, Reddit refused to remove sub-forums devoted to racist comments, citing the need for free and unhindered speech.
In recent years, the company has changed its mind about content moderation. Since Steve Huffman, co-founder of Reddit, returned as CEO in 2015, the start-up has revamped and refined its content policies. Reddit banned communities of Nazis and other far-right contingents. In June, he banned The_Donald, a sub-forum dedicated to supporters of President Donald J. Trump, who the company said had repeatedly broken its rules against harassment and other behavior.
Reddit said it plans to use the new capital injection to expand its community to more than 50 million daily active users. That includes courting more influencers and content creators, a decision he made when he bought the short video platform Dubsmash, a rival of TikTok, in December. Reddit, which has more than 700 workers, also said it will double that number this year.
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