Technology

Discord CEO on social audio app’s next big spends after recent $500 million funding

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.

In December 2020, Discord raised $100 million in that prior funding round that valued the company at over $7 billion and was led by Bessemer Venture Partners and Greenoaks Capital. Additional investors included Index Ventures, Greylock Partners, Accel Partners and Tencent Holdings.

The company ranked No. 3 on this year’s CNBC Disruptor 50 list. Additional investors have included Baillie Gifford, Coatue Management, Fidelity Management and Franklin Templeton.

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. A public listing is on the table but not imminent, according to sources familiar with the matter.

“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“. “We believe that people want to have safe environments where they can be themselves, relax, hangout with their friends … and a big part of that is feeling like it’s your space, you have your privacy, and you’re safe.”

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. The company says it’s pushing the industry to think more creatively about monetization and won’t be dinged by the criticism of other social media giants: “If you don’t pay for the product, you are the product,” Citron said.

Citron and his Discord co-founder Stanislav Vishnevskiy started the business as a platform for gamers who, like Citron himself, were frustrated by internet communications technology that he says wasn’t keeping up with the pace of change. Many used services like Microsoft’s Skype to communicate and six years ago, the company was focused on creating a way for people who played video games to hang out and talk to each other in a better way.

But a lot has changed.

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. Discord was early to the trend, and its live audio chat feature is popular for video gamers who want to talk about what they’re playing 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.

“We see tremendous opportunity to grow our business model,” Citron told CNBC in May.

The San Francisco-based company claims about 150 million active users per month and does not make money from advertising. Discord sells subscriptions to a premium service that allows customized profiles and high-resolution images and videos at tiers that charge $4.99 or $9.99 per month, or $99.99 per year.

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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