Reddit, the social news site infamous for leaked celebrity nude photos, is raising a big funding round - with help from some of the people who helped launch the site nine years ago, including co-founder Alexis Ohanian and other people associated closely with startup incubator Y Combinator, Re/Code reported on Sunday.
Sources said the site has reached a preliminary agreement to sell less than 10 percent of the company for more than $50 million. That could give the company a valuation of upwards of $500 million, according to Gawker.
Given investors' new-found appetite for content companies, like BuzzFeed and Twitch, Reddit's valuation may soar significantly by the time the deal is done, well above the $400 million it was looking for in 2013.
Investors that are likely to be part of the round include Andreessen Horowitz and Sequoia Capital. Some individuals associated with Y Combinator, the startup incubator that debuted Reddit in 2005, are also in the discussions. That is where Ohanian recently became a partner.
The involvement, according to sources, is ideally supposed to be important in making such an investment palatable to the often volatile Reddit community.
At least one other large-scale investor is involved, according to people familiar with the deal.
Advance Publications, the parent company of magazine publisher Condé Nast, is currently Reddit's biggest shareholder. Condé Nast bought Reddit in 2006 and put a spin on it a couple of years ago as a "re-incorporated independent entity."
Other shareholders are the employees. After the funding deal ends, Advance would still own roughly 50 percent of the company, sources said.
The funding is thought to be a big deal, since Reddit plays an important role on the Web because of its size and heft. The site, which consists entirely of user-supplied photos, links and discussions, has said it has 133 million visitors every month. It also acts as a reliable content generator for publishers like BuzzFeed, which repackages content that Redditors submit to their site.
Reddit became the major hub, specifically through the subreddit The Fappening, to find nude celebrity photos leaked by the website 4chan over the Labor Day weekend. The social network has banned The Fappening based on violations of the site's policies, according to a recently published HNGN article.
Numerous Digital Millennium Copyright Act requests filed into Reddit, requesting the pictures of celebs like Jennifer Lawrence, Rihanna, Ariana Grande and hundreds more be taken down. The community website could only delete photos uploaded by its users, not those shared from links to other servers hosting the pics, according to Reddit CEO Yishan Wong.
