Investors value Discord at $15B in funding round

Chat service Discord, which earlier rejected a $12 billion takeover, has now raised $500 million in a financing round valuing the company at $15 billion.

This nicely more than doubles the $7 billion with which investors valued the company in a funding round last year. Other valuations are still higher: Bloomberg reports that talks with potential buyers including Amazon and Twitter have valued the service at up to $18 billion.

Figure 1: Where there is Discord: Everyone wants to be friends with the chat service with the $15 billion valuation.
(Source: Alexander Shatov on Unsplash)

The $500 million in new capital will be used to expand Discord's workforce and "invest in new features and tools," said its CEO Jason Citron. The San Francisco-based company now boasts over 150 million monthly active users, who use it to communicate by voice, video and text. It began with video gamers, but has expanded to other users ranging from study groups, to art, comedy and karaoke.

Coronavirus in particular helped it to grow at a lightning pace. User numbers doubled in 2020, with 13 to 24 year olds in particular flocking to the site. Yearly revenues tripled that year to $130 million. Investors participating in the round were led by Dragoneer Investment Group, and also included the Edinburgh asset manager Baillie Gifford, Coatue Management, Fidelity Management and Franklin Templeton alongside existing investors.

Speculation on Wall Street has it that Citron is aiming at a public listing for the breakout chat service. But it is also an increasingly sought-out partner, as well as acquisition target. In May, Sony's PlayStation announced it had taken a minority stake in Citron's company, which will see Discord connect into users' consoles from early in 2022.

Discord ahead

Acquisitions can go both ways, and last month Discord bought Sentropy, an AI startup which focuses on detecting and removing online harassment.

Meanwhile, a popular Discord music bot, Groovy, was killed in August by a cease and desist letter. The bot allowed Discord users to add music to their chat rooms. But Google said Groovy violated YouTube's terms of service by "modifying the service and using it for commercial purposes."

Discord has had more luck with luring musicians to its Stage Discovery feature, where artists can list public events, including a pilot for ticketed ones. Musician Grimes (who is married to Elon Musk) used the feature to release an unreleased song to 100,000 fans on her Discord Server, called the Grimes Metaverse.

Discord killed the radio star

Discord's growth has meant the end of the chat for more traditional forums. Eurogamer closed their forums on September 10, after over 20 years of community discussion, which they said at their peak "welcomed thousands of active contributors each day." They encouraged readers to move to the site's Discord.

"Traditional forums are no longer a popular place for people to come together to talk, and have been replaced in popularity with more modern community platforms like Discord, Twitter, and Twitch," said Eurogamer.

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This follows the popular game maker Bethesda, who said in May it will "move our conversations from the Bethesda.net forums to our official Discord Servers." Bethesda warned users the forums would be scrubbed from the Internet, saying "you will have 30 days to save any post contents you wish to keep once the forums are closed."

In response, popular gaming forum Kokatu wrote "please stop closing forums and moving people to Discord." The two "are not the same thing, and will never be the same thing," said senior editor Luke Plunkett.

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— Pádraig Belton, contributing editor special to Light Reading