It makes a lot of business sense - just add (con)text to content from Reddit, a more accessible site than Reddit, it's way more advertisable, VC money can have a good place and they can beat Buzzfeed et al. at their own game.
The one thing that does bug me is that this is implicitly admitting that Reddit will not be fixed in any meaningful way. "Oh, we got a bajillion dollars in funding? Let's put it into something entirely new instead of making our current thing better!" If this fails miserably for some reason, I think Reddit's days might be counted.