Bluesky Raises $100M, Founder Steps Down: What’s Next for the Decentralized Social Network?

Bluesky disclosed a $100 million Series B funding round on Thursday, a raise that quietly closed in April 2025, ten days after founder Jay Graber transitioned to the role of Chief Innovation Officer. The funding was led by Bain Capital Crypto, with participation from Alumni Ventures, Anthos Capital, Bloomberg Beta, Knight Foundation and True Ventures.

The announcement comes nearly a year after the round’s completion, a delay that signals a strategic focus on development over immediate public momentum, according to observers. Since its Series A funding in October 2024, Bluesky has grown from 13 million to over 43 million global users, according to the company.

Graber’s shift to Chief Innovation Officer allows her to concentrate on the AT Protocol, the open social infrastructure underpinning Bluesky’s platform. Toni Schneider, former CEO of Automattic, the company behind WordPress.com, and a partner at True Ventures, is serving as interim CEO while the board conducts a search for a permanent replacement.

Graber framed the transition as a natural evolution, stating a need for a “seasoned operator focused on scaling and execution” as the company matures. She will focus on “building new things,” a reflection of her core strengths, according to the company.

Bluesky’s origins trace back to a Twitter-funded research initiative in August 2021, led by Graber, to explore decentralized social media. The project was later incorporated as an independent company.

The substantial increase in funding – from $15 million in Series A to $100 million in Series B – reflects a growing investor confidence in the decentralized social space and Bluesky’s position within it. Bain Capital Crypto’s involvement highlights the firm’s interest in web infrastructure and the potential of the AT Protocol, which emphasizes user ownership of data and social connections.

The Knight Foundation’s participation underscores the continued support from organizations focused on press freedom and an open internet.

The funding arrives as Bluesky confronts the challenge of monetization. The company has outlined a model based on subscription services and domain registration fees, but its ability to sustain growth and ambitious plans with this approach remains to be seen. Schneider’s experience at Automattic, where a similar model was successfully implemented with WordPress, suggests a potential path forward.

Bluesky’s emergence coincides with a shifting competitive landscape. Meta’s Threads, utilizing the ActivityPub protocol, has rapidly gained traction, boasting a user base significantly larger than Bluesky’s. X, formerly Twitter, continues to dominate real-time public discourse despite ongoing challenges.

Bluesky differentiates itself through the AT Protocol’s architecture, which allows users to control their identity and social graph, unlike the centralized model of X or the technically complex federation of Mastodon.

The company, built by Graber, has navigated its initial hurdles – the technical complexities of a decentralized protocol and the organizational challenges of scaling beyond its founder – and now faces the task of solidifying its position in a rapidly evolving social media landscape. Schneider’s appointment marks the beginning of that next phase, with the AT Protocol and its 43 million users closely watching.