Ello, the ad-free social network that promises users it will never sell their data, has raised $5.5 million in new venture funding, according to CEO Paul Budnitz.
Ello Raises $5.5 Million to Grow Its Ad-Free Social Network
Social network Ello, which has three million people on its waiting list, raised $5.5M.
Ello
The round was led by Foundry Group in Boulder, Colo., and comprises a number of additional institutional and individual investors, including another Boulder-based firm, Bullet Time Ventures.
Budnitz says the money will be used on product development, particularly building the back-end infrastructure that can support Ello’s growing user base. The site took off like a rocket last month, jumping from 90 total users in early August to hundreds of thousands in a matter of weeks. At one point, Ello, which is invite-only, peaked at 40,000 to 50,000 new invite requests per hour, Budnitz told Re/code. At times, Ello’s servers weren’t able to handle the traffic and the company had to freeze signups.
That’s what Budnitz hopes to fix with the new funding. He says the deal came together quickly given the unexpected growth — Budnitz was already in talks with Foundry but figured he’d raise the round three months down the road. Instead, the massive user interest forced him to push up his plans.
The CEO says Ello has over one million users, but an additional three million people on the waiting list. “As you can imagine, I’ve had, like, every VC in the nation in my inbox trying to invest in Ello,” he said.
Part of Ello’s draw is the company manifesto, which guarantees users an ad-free experience. Budnitz and the other Ello co-founders are so adamant about this idea that they’ve converted Ello into a public benefit corporation in Delaware. This means the business still aims to make money, but prioritizes and provides “a benefit to society” alongside its obligation to maximize profits for shareholders.
With new investors in the fold that will one day expect an exit for the company, Budnitz wanted to ensure his ad-free mantra isn’t just lip service. All of Ello’s founders and investors signed a letter to that extent, committing — in writing — to Ello’s mission.
“This company will never have ads and will never sell user data,” said Budnitz. “We’ve basically enshrined, in the most powerful legal way possible, our mission into the company.”
This article originally appeared on Recode.net.
