Reddit is allowing access to an “unnamed” artificial intelligence (AI) company ahead of the social platform’s initial public offering (IPO).
The deal, reported by Bloomberg is worth “about $60 million on an annualized basis” for AI models to be given access to Reddit’s material.
The move to allow an AI company into the nuts and bolts of content could be seen as a way to hook in more investors ahead of the platform making moves to enter the public trading domain, as we reported last month.
Bloomberg’s insider has said the “San Francisco-based firm told prospective investors in its IPO that it had signed the deal, worth about $60 million on an annualized basis, earlier this year.”
The move is an example of how important content licensing is becoming to AI companies that use source material to essentially feed the algorithms that create their outputs.
Due to several high-profile arguments about the validity of source materials of AI’s outputs, more and more companies are seeking official partnerships with registered businesses that AI algorithms hope to provide expertise on.
What is happening with Reddit’s IPO?
Steve Huffman, the Reddit CEO spoke about the possibility of an IPO late last year and mentioned that people attempting to use the platform to launch businesses could be a core part of the need to expand.
“People are trying to start businesses on Reddit, but it wasn’t built for that,” said Huffman to Fast Company in an interview last year, “So just trying to flesh out that ecosystem, I think that’ll be very powerful.”
Bloomberg has reported that 16 banks are involved in the Reddit IPO that is led by Morgan Stanley and Goldman Sachs Group Inc and also include “JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc.”
An IPO is the process of offering shares of a private corporation to the public after the company meets the requirements of the Securities and Exchange Commission (SEC). This is where the phrase “going public” originates from.
This stage of a company’s life cycle is where the early investors and shareholders agree that more money is needed to expand. So they lean on the expertise of banking institutions to take the share prices of a company into the public domain and the competitive seas of the stock market.
It helps these companies get better exposure and deals with loans and investments, but this also comes with increased transparency into accounting that must be disclosed publicly.
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Source: readwrite.com