Gaming platform Discord said Wednesday it has raised $500 million in a new funding round led by Dragoneer Investment Group.
Discord, which allows public and private groups to gather and chat by text, audio and video via its social platform, is now valued at $15 billion — more than double the $7.3 billion the company was worth in its previous round, according to PitchBook data.
Bessemer Venture Partners, Greenoaks Capital and Discord Capital led the prior funding round which valued Discord’s company at $7 billion. Discord received $100 million. Additional investors included Index Ventures, Greylock Partners, Accel Partners and Tencent Holdings.
Earlier this year, Discord ended deal talks with Microsoft and said it plans to expand its business as a standalone company focused on building the chat platform and making money from its user base that has grown quickly during the pandemic. According to people familiar with the matter, a public listing is possible but it’s not likely.
“The focus of the round is to give us the ability to continue to invest in making the best community app and services that we can bring to market for people,” said co-founder and CEO Jason Citron earlier this morning on CNBC’s “Squawk Box“. People want safe places where they are able to be themselves and relax.
Discord’s business model stands out in the social network space where so many technology companies, such as Facebook and Twitter, rely on advertising for the bulk of the revenue. Discord claims it is encouraging the industry to consider monetization more creatively and will not be hampered by criticism from other social media companies. “If you don’t pay for the products, then you are the products,” Citron stated.
Stanislav Vishnevskiy, Citron’s Discord cofounder, started the company to provide a place for gamers frustrated with internet communication technology that, he claims, wasn’t adapting at the speed of modern times. Services like Skype are used by many people to communicate. The company started six years ago to provide a forum for gamers who wanted to get together and have better communication.
There have been many changes.
Live voice chats are the hottest trend in social media right now, thanks to apps like Clubhouse, ranked No. 33 on this year’s CNBC Disruptor 50 list, and Twitter’s new feature called Spaces. Facebook also is readying its live audio product. It was the first to adopt this trend. Discord’s live audio chat is very popular with video gamers that want to share their gaming experiences in real time.
Earlier this summer, team communication app maker Slack also announced that organizations paying for its software will gain access to a new feature that allows colleagues to start quick audio-only calls in a given channel or direct message.
Citron said that “we see enormous opportunity to expand our business model.” He spoke on May 5th to CNBC.
According to the San Francisco-based firm, there are approximately 150 million monthly active users. The company does not earn any advertising revenue. Discord offers premium subscriptions at $4.99, $9.99 and $99.99 per annum. This service allows for customized profiles as well as high-resolution photos and videos.
Improving its ability to keep people safe online, new features that allow users to organize how they communicate, and investing in the subscription service — which is how Discord makes money — to create more value, are what Citron said the company is bringing to market.
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