And now, for the moment you’ve all been waiting for—a Reddit IPO.
It’s official, the social media company is going public after months of speculation. Reddit filed its S-1 yesterday and revealed all sorts of things we didn’t know before. That’s the reason an S-1 is exciting, right? You get to look under the hood at a company that was previously firmly shut.
But the numbers under Reddit’s hood, while interesting, aren’t exactly what I’d call exciting. To me, they’re illustrative of a company with a complex past, present, and (in all likelihood) future. Reddit’s 2023 was mixed, the filing shows. While the company’s revenue growth was up 21%, the company also clocked $90.8 million in losses last year. Reddit additionally reported 73.1 million daily active users in the three months leading up to the end of the year—and that number gets bigger once you get to weekly active users, 267.5 million.
Those user numbers sound big, but so you understand what Reddit is up against when it comes to social network scale, consider Facebook (yes, specifically the platform). Per Meta’s latest earnings, Facebook’s daily active users were, on average, 2.11 billion in December. That leaves out Meta’s so-called “Family of Apps” which includes Instagram and WhatsApp. Even Snap, a social media minnow compared to Meta, boasted 414 million daily active users in Q4 2023.
My guess is that in the public markets, Reddit will be pressured to get its user numbers up, stat.
But there are other pieces to this puzzle, odd details that have led up to this moment. Reddit has, I would argue, an oddball relationship with the public markets. For one, this isn’t exactly Reddit’s first IPO rodeo. There’s part of me that can’t help but ask, “do they really mean it this time?” and every indication is that they do.
But, as Taylor Swift and Bon Iver would say, “I think I’ve seen this film before.” In 2022, Reddit reportedly tapped Goldman Sachs and Morgan Stanley for a go-public that was, at the time, ostensibly imminent. Reddit also said it filed for an IPO in 2021. In 2017, Reddit CEO Steve Huffman said a go-public was “inevitable.”
Another curious twist: In a way that’s not actively true of other social media platforms, Redditors themselves have played a role in the public markets before—the now-famous r/WallStreetBets subreddit was central to GameStop and meme-stock mania in 2021. I checked up on WallStreetBets as I was writing this, and the primary post that caught my eye read “Reddit lists WSB as a risk factor for its IPO” with a smirking emoji.
And add to that: Over in the secondary markets, the appetite for Reddit shares is not exactly ravenous. According to private markets platform Forge, there hasn’t been a spike in activity surrounding IPO chatter for Reddit (which one might typically expect) and year-to-date the company’s private market share price has remained flat.
It’s not clear how much money Reddit is hoping to raise in its flotation, nor at what price it hopes to sell shares. A Bloomberg report last month said the company was hoping for a valuation of at least $5 billion, which would be quite a step down from the $10 billion valuation Reddit reportedly garnered in 2021 fundraising.
What this all amounts to, I don’t know. But the one thing I do know is this—people love an IPO, and many people (myself included) love Reddit as consumers. The exit market is so stilted, and if it rips, Reddit could be a private markets hero for reopening the IPO market at a tough time. A successful Reddit IPO could provide a much-wanted, much-needed, much-yearned for reopening to the public markets. But this also isn’t a guaranteed slam dunk.
If you want to read more about Reddit—today seems like the day, no?—my Fortune colleagues have got you. Jessica Mathews wrote about why this is a particularly treacherous time for Reddit to be pursuing its IPO, Kylie Robison wrote about Reddit’s connection to Sam Altman, and Alicia Adamczyk explained what makes Reddit’s IPO nontraditional.
See you Monday,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.
Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
– Antora Energy, a Sunnyvale, Calif.-based developer of batteries designed to convert renewable electricity into industrial energy, raised $150 million in Series B funding. Decarbonization Partners led the round and was joined by Emerson Collective, GS Futures, The Nature Conservancy, and others.
– PermitFlow, a Milpitas, Calif.-based developer of construction permit software, raised $31 million in Series A funding. Kleiner Perkins led the round and was joined by Initialized Capital, Y Combinator, Felicis, Altos Ventures, and angel investors.
– Synadia Communications, a San Mateo, Calif.-based developer of open source connective technology, raised $25 million in Series B funding. Forgepoint Capital led the round and was joined by Singtel Innov8, LDVP, and 5G Open Innovation Lab.
– Empowerly, a San Francisco-based provider of personalized college and career guidance, raised $15 million in funding. Conductive Ventures led the round and was joined by others.
– Helius, a Toronto, Canada-based platform designed to make building crypto applications on Solana faster and easier, raised $9.5 million in Series A funding. Foundation Capital led the round and was joined by Reciprocal Ventures, 6th Man Ventures, Chapter One, Propel, and others.
– Apica, an El Segundo, Calif. and Stockholm, Sweden-based provider of data management and observability software, raised $6 million in funding. Riverside Acceleration Capital led the round and was joined by existing investors Industrifonden, SEB Foundation, Oxx, and LEO Capital.
– Finpilot, a Seattle, Wash.-based developer of AI technology designed to extract knowledge out of financial data, raised $4 million in seed funding. Madrona led the round and was joined by Ascend.vc.
– hellohive, a New York City-based recruiting platform designed to connect companies with talent from diverse backgrounds, raised $3.4 million in Series A funding. The Tisch Family led the round and was joined by The Pearl Fund, Hillside Ventures, Ann Tenenbaum, Jeff Altman, and Robert Bell Wilkins.
– VectorShift, a New York City-based generative AI application development platform, raised $3 million in seed funding from 1984 Ventures, defy.vc, Formus Capital, Y Combinator, and others.
PRIVATE EQUITY
– Apica, backed by The Riverside Company, acquired Circonus, a Malvern, Pa.-based telemetry data company. Financial terms were not disclosed.
– Apryse, backed by Thoma Bravo, acquired LEAD Technologies, a Charlotte, N.C.-based provider of AI-powered software designed to assist businesses with integrating recognition, document, medical, and other technologies. Financial terms were not disclosed.
– Siris acquired a minority stake in Gigamon, a Santa Clara, Calif.-based deep observability company. Financial terms were not disclosed.
– TIMETOACT GROUP, a portfolio company of Equistone Partners Europe, agreed to acquire Trustbit, a Vienna, Austria-based IT consulting company. Financial terms were not disclosed.
– Tufin, backed by Turn/River Capital, acquired AKIPS, a Queensland, Australia-based provider of network and infrastructure monitoring software. Financial terms were not disclosed.
EXITS
– Levine Leichtman Capital Partners acquired USA Water, a Rosenberg, Texas-based operations and maintenance services provider for wastewater systems, from Warren Equity Partners. Financial terms were not disclosed.
– Sigma Q Packaging acquired Grupo Industrial Artes Graficas, a León, Mexico-based labels manufacturer, from Alta Growth Capital. Financial terms were not disclosed.
OTHER
– Chord Energy agreed to acquire Enerplus, a Calgary, Canada-based oil and natural gas producer, for $3.7 billion in stock and cash.
– Resilience acquired BreachQuest, a Dallas, Texas-based provider of incident response technology solutions. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– ORI Capital, a Hong Kong and Natick, Mass.-based venture capital firm, raised $260 million for its second fund focused on early-stage biotechnology companies.
– Golden Ventures, a Toronto, Canada-based venture capital firm, raised $100 million for its fifth fund focused on seed-stage technology companies.
PEOPLE
– S32, a Palo Alto, Calif.-based venture capital firm, hired Dr. Andy Conrad as general partner. Formerly, he was with Laboratory Corporation of America.
