Discord, the communications service that’s become the 21st century’s answer to MUD rooms, is close to closing a new round of financing that would value the company at up to $7 billion, according to sources with knowledge of the round.
The new funding comes just months after a $100 million investment that gave the company a $3.5 billion valuation. Discord’s doubling in corporate value comes as the persistent, inept, American response to the COVID-19 pandemic continues to accelerate the adoption and growth of businesses creating virtual social networking opportunities.
Discord built its initial growth on the back of the gaming industry and the rise of multi-player, multi-platform games that supplanted earlier social networks as the online town square for a generation of young gamers (whose numbers globally now spiral north of several billion).
But, as the company’s founders noted when they announced their last round of financing, the Discord use case has extended far beyond the gaming community.
“It turns out that, for a lot of you, it wasn’t just about video games anymore,” wrote co-founders Jason Citron and Stanislav Vishnevskiy in a July blog post announcing the latest financing.
The two men frame their company as “a place designed to hang out and talk in the comfort of your own communities and friends.” Discord, they say, is “a place to have genuine conversations and spend quality time with people, whether catching up, learning something or sharing ideas.”
If that sounds familiar to some of the internet’s earliest users, that’s because it is. Back in the dawn of the world wide web, multi-user dungeons (MUD) provided ways for practitioners of any number of sub cultures to find each other online and chat about whatever tickled their collective fancy.
As the web evolved, so did the number of places and spaces for these conversations to happen. Now there are multivariate ways for users to find each other within the web, but Discord seems to have risen above most of the rest.
As analyst John Koetsier noted in Forbes back in 2019, there were already 250 million Discord users sending 315 million messages a day. Those are the company’s pre-pandemic numbers — and they’re impressive by any standards.
As with any platform that has become popular on the web, Discord isn’t without its underbelly. Three years ago, the company tried to boot a number of its most racist users, but their ability to use the platform to disseminate hate speech has stubbornly persisted.
Until mid-2019, white nationalists were comfortable enough using the service to warrant a shoutout from Daily Stormer founder, Andrew Anglin, who urged his fellow travelers to stop using the service.
“Discord is always on and always present among these groups on the far-right,” Joan Donovan, the lead researcher on media manipulation at the Data & Society Research Institute, told Slate in 2018. “It’s the place where they do most of the organizing of doxing and harassment campaigns.”
To date, Discord has raised $379.3 million, according to Crunchbase, from an investor group that includes Greylock, Index Ventures, Spark Capital, Tencent and Benchmark.
In addition to the cash it raised earlier this year, Discord emphasized a new user experience and added video functionality so that users could communicate more readily (and so the company could compete with Zoom). There are templates available to help users create servers, and the company has increased its voice and video capacity by 200%.
As part of this new focus on product, Discord has launched what it calls a “Safety Center” that clearly defines the company’s rules and regulations and what actions users can take to monitor and manage their use of service for hate speech and abuse.
“We will continue to take decisive action against white supremacists, racists and others who seek to use Discord for evil,” the founders wrote in June.
As we reported at the time, Index Ventures co-founder Danny Rimer, who led the investor group that backed Discord’s latest $100 million cash infusion, was an advocate for the company’s expanded vision for itself.
“I believe Discord is the future of platforms because it demonstrates how a responsibly curated site can provide a safe space for people with shared interests,” Rimer wrote in a statement. “Rather than throwing raw content at you, like Facebook, it provides a shared experience for you and your friends. We’ll come to appreciate that Discord does for social conversation what Slack has done for professional conversation.”
Apparently, investors are doubling down on that assessment.