Viral sensation Ello said Thursday it raised $5.5 million from a group of investors that includes Boulder’s Foundry Group. The social network also converted to a public benefit corporation, or B corp, and pledged to never bother users with advertising or sell personal information — even if the company is sold.
“Aside from the skepticism, it was to keep ourselves in check,” said co-founder Todd Berger, who heads up Ello’s activity in Boulder. “We were fortunate that we met and had access to parties who were aligned with our philosophy. None of us have been sellouts in our career. We just wanted to make that contractually binding.”
Ello, which launched Aug. 7, touted a clutter-free hangout for friends that didn’t track users or spam them with ads. It attracted publicity and gained a following from drag queens leaving Facebook because that site required using real names. At some point, 45,000 people per hour were requesting invites to Ello, the company said.
The B corp designation started showing up earlier this decade to distinguish for-profit companies wanting to make a positive impact on society.
If registered — which Ello did in Delaware — the company is expected to stick to its charter and is held responsible by the state and investors.
In its charter, Ello is committed to three things:
• Ello must never make money from selling ads.
• Ello must never make money from selling user data.
• If Ello is sold, the new owners must comply to these terms.
Berger said his design firm, Berger & Föhr, already was a B corp because he and partner Lucien Föhr wanted to maintain a socially and environmentally responsible practice.
While Ello may seem idealistic, the company is a business, Berger said.
The Series A round of funding was led by locals from Foundry Group, Techstars’ Bullet Time Ventures and Fresh Tracks Capital.
“Signing the Ello charter was a no-brainer for us as investors,” Techstars managing partner Mark Solon said in a statement. “We believe in the mission, and the (B corp status) further enforces the manifesto and Ello’s vision to never market their users to third parties.”
Ello plans to use the $5.5 million to invest in technology, design and development. It wants to build mobile and desktop apps, a responsive website plus its own app store to sell premium features, such as more customization, to users.
“We’re pretty stoked about moving forward. And we’re still having fun. Hopefully, the (B corp) thing enables us to put our money where our mouth is and to assuage the dissenters,” Berger said.
Coincidentally, Facebook launched “Rooms” on Thursday to create private places online where users can post anonymously.
Tamara Chuang: 303-954-1209, tchuang@denverpost.com or twitter.com/Gadgetress
