Reddit finalizes content licensing agreement with AI company as it prepares for IPO launch

Reddit Inc. has signed a content licensing deal with an artificial intelligence company ahead of its highly anticipated initial public offering (IPO). The San Francisco-based firm has entered into a contract allowing the AI company to train its AI models using Reddit’s content, which is estimated to be worth about $60 million on an annualized basis. The deal comes as Reddit prepares to launch its IPO, with the company aiming for a valuation of at least $5 billion.

According to sources familiar with the matter, Reddit has informed prospective investors about the deal, which could potentially set a precedent for similar agreements in the future. The move could help Reddit tap into investors’ enthusiasm for technology and boost its IPO, as the company reported more than $800 million in revenue last year, marking a 20% increase over its 2022 figures.

While the details of the IPO and the AI deal are still being finalized, it is reported that about 16 banks, led by Morgan Stanley and Goldman Sachs Group Inc., are working on the IPO. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. are also among the banks on the deal.

The AI companies have been seeking data licensing deals with content providers in a bid to train their programs on new sources of data. OpenAI recently entered a contract with German media giant Axel Springer SE for AI training, while the startup behind the ChatGPT text generation tool is in talks with publishers such as CNN, Fox Corp. and Time to license their work.

Deliberations around the IPO are ongoing, and the details of the listing and the AI deal could change, according to sources who requested anonymity as the information isn’t public. A representative for Reddit declined to comment on the matter.

Overall, Reddit’s content licensing deal with the AI company and its preparations for a potentially groundbreaking IPO indicate the company’s strategic move to harness the power of artificial intelligence and capitalize on investors’ growing interest in technology.