Thursday, April 22, 2021

Discord Ends Talks With Microsoft On Purchase

Since I commented on the rumor in March, I might as well continue. According to Reuters, Discord has ended talks about selling the company to Microsoft.

Messaging platform Discord Inc has ended deal talks with Microsoft Inc (MSFT.O) and plans to focus on expanding the business as a standalone company, sources familiar with the matter told Reuters on Tuesday.

The company will focus 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, the sources added.

A big backer of Discord is Index Ventures, who has invested in funding rounds in June 2020 and December 2020.  According to Forbes back in June:

Its broader appeal has also captured the attention of venture investors. In a reversal of how things usually work in Silicon Valley, Index Ventures’ Danny Rimer, whose firm had invested in Discord’s last fundraising in December 2018, called them in February to offer more money. In a deal not previously reported, Citron and Vishnevskiy agreed in June to take another $100 million in venture funding—at a $3.5 billion valuation, up from $2.05 billion 18 months ago. 

The funding comes with the understanding that Citron and Vishnevskiy, who hold stakes in the startup worth probably more than $350 million each, will continue to broaden the app’s audience and focus on growing revenue. Discord is on track to top $120 million in sales this year, Forbes estimates, up from around $70 million last year, fueled by its subscription service called Nitro, which allows users to customize their profiles and the Discord groups that they belong to.

“They’re building something of tremendous value,” says Rimer. “If they carry on with this trajectory, we’re gonna be very, very happy folks.”

Most of the stories I've read indicate Discord is looking at issuing some sort of initial public offering (IPO). I'm not sure how I feel about Discord going public, but with valuations in the $7-$10 billion range, the company is big enough to do so.

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