Why Discord Was Able To Raise ~$50M At A $700M+ Valuation


Discord Raises ~$50M (Photo: Discord)

Discord Raises ~$50M (Photo: Discord)

TNL Take: Last week we began the first part in a series looking at ~$100M of eSports US investment this year, beginning with Super League Gaming, AEG and Matcherino.

Today we'll look at the biggest investment - and valuation - to date, Discord. 

For those more Brooks Brothers than Battlefield, Discord is basically this: Slack for Gaming and eSports.

Discord's Voice and Text Platform (Photo: Discord)

Discord's Voice and Text Platform (Photo: Discord)

Earlier this year, Techcrunch reported that Discord secretly raised ~$50M led by Index Ventures, along with Institutional Venture Partners and previous investors Spark Capital, Benchmark and Greylock Partners and Benchmark.

TNL eSports Startups 012: Discord Raises ~$50M (Photo: Discord)

TNL eSports Startups 012: Discord Raises ~$50M (Photo: Discord)

While that's by far the biggest raise by a US eSports related startup - yes, it's not primarily an eSports only platform but it's integral to the scene - the pre-money valuation is north of a whopping $700M.


Here's what's even crazier: by my estimates, Discord probably made less than $1M in revenue last year. No advertising. Some merch. Again, that's less than $1M in revenue and valued at almost a billion dollars.


As I speak to both investors and startups, it's befuddling to me how much both sides minimize monetization early in the strategic planning or product roadmap:


Me: How are you going to make money?

Startup: We'll figure out once we get scale.

Me: How are they going to make money?

Investor: They'll figure it out once they get to scale.


In the casino game - sorry venture capital - that is startup investing, it's the standard playbook of grab market share/eyeballs and then figure out how to monetize later like Facebook did. Further, Discord checks the boxes on key areas that VC's look for: Team (solid), previous experience (CEO sold OpenFeint for $100M+), and huge return (exit opportunity).

How big is Discord? They currently have 45M registered users quadrupling from a year ago.

There's a very simple reason why Discord was able to grow so quickly: the platform simply works, game integration and most importantly, no one liked using either Teamspeak or Skype.

Discord vs. the Competition (Photo: Discord)

Discord vs. the Competition (Photo: Discord)

So why is Discord valued so much and how could they actually make money? 

Let's look at a few different possibilities:



Gamebridge Integration In Lawbreakers (Photo: Discord:)

Gamebridge Integration In Lawbreakers (Photo: Discord:)

Gamebridge is DIscord's 1-stop solution for integrating a multitude of features into a game that developers don't have to worry about: 

  • Voice and text chat for teams/friends
  • Auto generate game replay's, highlights and even GIF's
  • In a brilliant move, this automatically generates an individual discord server as well

The Gamebridge technology will be integrated into Boss Key/Nexon's upcoming title Lawbreakers, led by Gears of Wars creator Cliffy B.

Revenue Potential: SaaS for Developers



Discord's Streamkit Platform (Photo: Discord)

Discord's Streamkit Platform (Photo: Discord)

Streamkit is Discord's next product which again simplifies efforts for developers for multiple API integrations.

The reason I keep enforcing "make it easier for devs" is that unless you've worked at a gaming company, you don't realize the immense pressure game teams are under to deliver a continually changing product, on time, with little resources and time away from your family. #ShoutOutGameDevelopers 🙏🏽

Somewhat similar to Overwolf, this platform could be the outlet for the 3rd party money plug.

Revenue Potential: Revenue sharing/3rd party app integration/Steam competitor




Twitch's Amazon Game Buying Integration (Photo: Amazon)

Twitch's Amazon Game Buying Integration (Photo: Amazon)

As I mentioned in "eSports Wars: Twitch vs. Everyone Else Part 2", Twitch will allow streamers to get a piece of the pie of any game bought through them via Amazon - personally I'm shocked this wasn't launched sooner.

Discord could easily copy the same model.

Revenue Potential: Game sales revenue sharing/Steam competitor



Nitro, Discord's Subscription Product (Photo: Discord)

Nitro, Discord's Subscription Product (Photo: Discord)

Nitro is Discord's subscription service that allows users to have an animated GIF, custom emoji's, and badges.

Sound familiar? It's not far off from Twitch's streamer subscription benefits for users.

Revenue Potential: Monthly subscription revenue



Last and definitely not least, Advertising and Sponsorship. With the 3 things that Brands look for the most in their investment - scale, engagement, ROI - Discord could easily provide this.

Revenue Potential: Brands


Those are 5 different ways that Discord could monetize their platform going forward. They also do a fantastic job maintaining their "cool brand" within the community, via Hypesquad or their Partner program.

It's not like Discord doesn't have obstacles ahead of them: recently Twitch has launched a Voice app, desktop app, Twitch Pulse, and a massive mobile update.

And the billion dollar question - who would pay a billion dollars for Discord?


My guess: A Publisher, platform or a Media company.

AEG Makes Second eSports Investment With Immortals


AEG Invests In eSports Team Immortals (Graphic: The Next Level)

AEG Invests In eSports Team Immortals (Graphic: The Next Level)

TNL Take: For eSports owners with decent teams, popular fan following but more importantly - being business savvy - it's like mid-1800's California gold rush or mid-1980's Los Angeles crack era: the money is pouring in.

eSports team Immortals raised another round, this time from massive sports and entertainment conglomerate AEG. Immortals were also one of the first teams to receive investment related to the NBA with Memphis Grizzlies co-owner Stephen Kaplan back in November 2015:

TNL Infographic 027: NBA Investment In eSports (Graphic: Jordan Fragen)

TNL Infographic 027: NBA Investment In eSports (Graphic: Jordan Fragen)

This investment makes sense for a number of reasons:

  • AEG is based in Los Angeles just like Immortals
  • Immortals already has an impressive investor list including Lionsgate, Crosscut Ventures, Michael Milken, Machine Shop Ventures, March Capital Partners, Kaplan and others
  • Immortals will play their events at LA Live, an AEG venue
  • The music, entertainment, and content production opportunity


This is also the second investment within eSports, having first signed a long-term partnership with ESL to host their events at AEG's locations including Barclay's Center, Oracle Arena and London's O2 Arena; which all have held eSports events previously.


While the round was undisclosed, you know I'm going to take a stab anyway: I'd venture that it was at least $10M+ - more on why that amount when we get to the recent Overwatch League "news" Soon™

Australian PE Firm Buys eSports Team LG Dire Wolves


Guinevere Capital Buys Controlling Stake In LG Dire Wolves (Photo: Guinevere Capital)

TNL Take: Now that the influx of eSports and Pro Team's investments have started, this is only just the beginning across a multitude of sectors.

Australia joined the eSports Investment party last week when Melbourne based Private Equity firm Guinevere Capital bought a controlling stake in local team LG Dire Wolves.

This investment is a bit curious though.

LG Dire Wolves aren't that big and tiny compared to the likes of Dignitas (76ers) and Team Liquid (aXiomatic). They currently only have a League of Legends team with some previous experience with Smite.

The team did recently sign a deal with LG Electronics hence the name.

LG Australia Signs Dire Wolves (Photo: LG Dire Wolves)

There's also very little info on Guinevere Capital - the website just has their logo.

Guinevere's Managing Director David Harris has a traditional Sports background in Cricket, Rugby and Football.

My guess as to why LG Dire Wolves? Local and inexpensive.

LG Dire Wolves joins other eSports teams like Immortals and Team EnVyUs with VC/PE investment.

TNL eSports Startups 008: Gumbler Grabs $5.5M For Real Money eSports


TNL eSports Startups 008: Gumbler (Photo: The Next Level)

TNL Take: The Market Opportunity between Gaming, eSports, Casinos and Gambling is enough to make any Venture Capitalist salivate.

The risks are clear though.

Just ask the Legal team for DraftKings/Fanduel or Valve with it's massive PR mess around Counter-Strike Gambling.

This week the UK Gambling Commission brought its first prosecution against Craig “NepentheZ” Douglas and Dylan Rigby, who have been charged with promoting a lottery and advertising unlawful gambling site which used FIFA Coins.

Even with that, Venture money continues to flow into the space. Last week I wrote about Real Money platform Rumblemonkey which launched publicly after raising an angel round.

Yesterday, Swedish startup Gumbler announced a $5.5M investment for their Real Money skill based gaming platform.

TNL eSports Startups 008: Gumbler (Photo: Gumbler)

Gumbler claims players of the Mobile game Mad Skills Motocross 2 have won a total of €650,000 in 2016 with an average revenue of €45 per paying player each month.

TNL eSports Startups 008: Gumbler (Photo: Gumbler)

Gumbler is not just looking at Mobile as an exclusive platform with upcoming PC support.

Interesting to also note that Gumbler VP Simon Sunden is the former Head of eSports at MTGx, the company that invested in ESL.

Finally, what is in the water in the Nordics?

Over just the past two months, I've covered four Nordic eSports investments:

Sweden: Znipe Raises $1M

Sweden: Strife Raises $1.5M

Sweden: Team NiP Worth $12.5M

Finland: Critical Force $4.5M


Winter maybe coming in the North but eSports investment is heating up.


OK. I even hate myself for that line.