Ello Raises $5.5 Million For Ad-Free Social Network

Ad-free social network Ello on Thursday announced raising $5.5 million in new venture funding in a round led by the Foundry Group in Boulder, Colo.

To affirm its founding manifesto, the company converted to a public benefit corporation (PBC) in Delaware, promising within its legal charter never to make money from selling ads or selling user data. New owners would also have to follow the terms.

As a PBC, Ello would still be able to make money as a for-profit business, but would balance shareholder interests with the goal of producing a public benefit and operating in a “responsible and sustainable manner.”

"The Internet is turning into one giant billboard, and with essentially all social networks relying on advertising, data mining and selling user data, it can be hard for some people to imagine a better way. At Ello, we're building it," stated company co-founder and CEO Paul Budnitz.

Ello instead plans to make money by selling personalized features and other services at small prices through an online store, “inspired by the Apple App store.” The start-up said it already has thousands of community members asking for specific paid features.

Launched earlier this year, Ello saw membership spike from just 90 users in August to hundreds of thousands the next month. Helping to propel the September surge was an influx of people, especially within the LGBT community, defecting from Facebook following the controversial enforcement of its real-name policy, seen as an affront to drag queens. (Facebook has since apologized and changed its policy.)

Invite-only Ello says it’s now getting 45,000 invite requests per hour at peak times. Budnitz told Re/code the site now has over 1 million users, but another 3 million on the waiting list. The company intends to invest its new financing on product development, especially on the back-end infrastructure to handle Ello’s fast-growing user base.

While the social network bans advertising, brands including wireless speaker maker Sonos, Netflix, The Wall Street Journal and The Atlantic have already rushed to set up profiles on Ello. As The Atlantic itself has pointed out, and today’s announcement makes clear, Ello may be free of paid advertising, but it doesn’t necessarily make it a commercial-free space.

Along with Foundry Group, Techstars' Bullet Time Ventures, and FreshTracks Capital participated in the first-round funding.

2 comments about "Ello Raises $5.5 Million For Ad-Free Social Network".
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  1. Stone Zuber from ASU, October 25, 2014 at 9:08 p.m.

    This is an extremely interesting concept. This company is absolutely genius for coming up with an ad-free social media site. This article explains that they began with about 90 users in August but within a very short time frame, it has already climbed to impressive numbers. Not to mention, the impressive amount of money they’ve raised ($5.5 million). This site is invitation only, which makes consumers interested in its features. CEO, Paul Budnitz plans to make money by selling personalized features and other services. Could Ello be the start of a new way of social media?
    I think so. Their impressive numbers continually climbing seems to agree. Consumers don’t like ads and now they have an invite-only social media site, which offers another means of communication. Of course, users are always up for trying to the new and upcoming thing, especially if they don’t have anything to risk (like money.) The CEO and founder explains that the site will offer something similar to the Apple App Store where its users can test out, download, and buy offered features and services.
    Not to mention, Ello is also beautifully designed. Their new, modern, and classic feel is inviting and attracts consumers for more. Not going to lie, I’m a little curious myself. As a design student, I appreciate anything aesthetically appealing; especially if it’s a social media site that I could find myself on everyday. Why not make it a more enjoyable place to be by making it free of ads? Genius.

  2. Alissa Greene from ASU , October 26, 2014 at 7:36 p.m.

    This could not have come at a more appropriate time, now that display and content ads are flooding what seems like every window I have open on my internet browser. I think the huge growth and reason for have 3 million people on the waiting list is definitely surged by the obnoxious clutter that infiltrates our other social media and digital platforms. It seems that now everyone sells their users information and you often do not even understand the caliber of these companies selling your personal information. Furthermore, the look and appeal of Ello fits appropriately with a more informed, busy, and younger demographic. It conforms nicely to an apple-based world, where consumers move towards the sleek and clean look of the Ipod style. I truly feel this takes everything like Linkd-in and Facebook, and makes it truly what it is; a personal and social forum. Users go onto their social media to typically stay connected to their communities and friends. Advertising gets in the way, makes the experience negative and frustrating, while eliminating any personal feel. I think this article provides the reader with a sense of excitement and wanting to belong to this type of community because there is an automatic trust formed through venture funding versus selling our secrets. The fact that users have a say and can purchase different features makes for a truly personalized and personal experience. You are not forced to buy an entire dashboard, nor are you limited. Of course companies can still create their own profiles, there is a difference between being voluntarily exposed because you have a relationship with certain brands, and them just forcing their way onto your screen, in your content, and in your face.

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