Social media platform Reddit secured $300m in a series D round, which was led by an $150m commitment from China-based internet group Tencent, reportedly valuing Reddit at $3bn post-money. The round featured undisclosed existing backers as well. Previously Reddit has received backing from other corporates: Condé Nast, part of media group Advance Publications, had acquired Reddit in 2006 but the company was then spun off with 2014 through a $50m series B round. In 2017, the company raised a $200m round, which featured financial services group Fidelity. Although Tencent is not its first corporate backer, the round raised concerns about potential censorship on the platform, which is inaccessible in China and known for being a free speech space among its user base. However, the gaming content on the platform is more likely the reason behind Tencent’s investment, as Tencent is the world’s largest game publisher by revenue.
Founded in 2005, Reddit operates an online social platform with 330 million monthly active users who are spread across a range of self-moderated theme-based groups called “Subreddits”. Albeit generating revenues ($85m in 2018), Reddit is currently said to be looking to capitalise on advertising opportunities on the platform.
Corporate-backed investments in emerging social media and messaging businesses have remained somewhat stagnant over the past few years – 34 rounds in both 2017 and 2018, with $2.46bn of total estimated capital in rounds in the former and only $359m in the latter.
However, there is different picture in the gaming and eSport space, as the other GCV Analytics bar chart below shows. In 2018, the number of corporate-backed deals in that realm almost doubled in both value and volume – 57 rounds, up from 32 in 2017, while the total estimated capital in those rounds stood at $2.62bn – up 110% from $1.24bn the previous year.
