Ello Pulls In $5.5 Million In VC Funding Even With Uncertain Revenue Stream
Ello was able to gain some attention recently when it announced that it would be a social media network that wouldn’t sell user data or have advertisements. The invite-only network, which is currently in beta, appears to be an appealing prospect for many who have become tired with ads on social networks such as Facebook, which also collects and sells user data. But despite the fact that it will not have ads or sell data, it has received $5.5 million in funding from several corporations.
The company received funding from The Foundry Group, Bullet Time Ventures, and FreshTracks Capital on the same day it made its ad-free stance official by filing in Delaware to be a Public Benefit Corporation. This means that Ello’s charter now forbids the company, under US law, from selling user data, show ads, or even sell the company to anyone who would not uphold its policy.
In order for Ello to have some kind of revenue, it will rely on the selling of add-ons and modifications for its app. A strategy that some are skeptical of but not in the case of Foundry Group managing director Seth Levine who posted a blog that stated, “Foundry Group is completely supportive of the Ello mission. We’ll either build a business that doesn’t rely on third party advertising or the selling of user data or we won’t build a business. Our belief is that there are products and features that Ello can develop that users will be willing to pay for. While the price points may be low, as part of a much larger ecosystem with millions of users, will provide an economic model for the company which supports the business and our investment.”
Whether Ello will be able to continue on this path has yet to be seen, but is still a topic that many are discussing.
What do you think of Ello’s business strategy and are you participating in the beta?