Jul 31, 2017

Reddit raises $200 million, reaching $1.8 billion valuation

Online discussion site Reddit has nabbed its largest funding round ever, raising $200 million from a group of Silicon Valley heavyweights including Andreessen Horowitz and Sequoia Capital, as well as individual investors like Y Combinator's Sam Altman, who sits on Reddit's board. and a few other investment and mutual funds. CEO Steve Huffman told Recode that the additional cash will go towards internal product and business efforts, including a homepage redesign, a more mobile-friendly design and a push into user-generated video.

Why it matters: Reddit has grown its audience steadily over the past three years, despite a leadership shakeup in 2014 and a few complicated moments surrounding free speech and alt-right groups on the platform. The new investment shows investors believe Reddit can continue to grow despite these setbacks.

Data: comScore; Chart: Chris Canipe / Axios

But where's the exit?: Axios' Dan Primack notes that a big question remains as to how these investors ever get out. Huffman says liquidity could lead to many paths, but it's unclear the type of investor that would want to eventually buy Reddit. Huffman suggests an IPO as a possibility But while Reddit has grown its traffic steadily over the past few years, the company hasn't scaled its monetization businesses to meet that bandwidth, and traders care even more about revenue than VCs.

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