Invest in the Real-Time Social Network

Invest in the Real-Time Social Network

Some of the biggest technological revolutions come from rethinking time itself. Letters gave way to emails, collapsing days into seconds. Streaming services replaced rentals, turning weekend plans into instant entertainment. And where communication in online communities once relied on slow, asynchronous exchanges, a new model has emerged—one where real-time engagement has transformed how we connect, share, and belong.

For years, social media promised connection, but it rarely delivered the kind of immediacy that makes people feel truly engaged. Reddit offered forums for niche interests, but discussions unfold slowly, often with a detached tone. Facebook allowed users to connect with many people at once, but interactions remained sporadic, rarely creating the constant sense of presence that real relationships require. These platforms excelled at bringing people together in concept but left space for something more personal and immediate.

That gap left an opportunity for a platform built around real-time interaction—a space where conversations evolve naturally, where voices and faces bring communities to life, and where belonging feels immediate.

What started as a tool for gamers has grown into a cornerstone of modern online interaction, fostering instant connections across education, AI, crypto, and beyond. That platform is Discord.

Traction

Discord’s evolution from a gamer-focused chat platform to a universal hub for online communities demonstrates its remarkable adaptability. Launched in 2015, Discord has successfully expanded beyond its gaming roots to attract educators, crypto enthusiasts, and niche hobby groups. This ability to evolve and scale has solidified its position as a leader in the digital community space.

Key Growth Metrics

• User base: By the end of 2023, Discord reached 560 million registered users, with 150 million monthly active users.

• Revenue: Discord generated $937.6 million in total revenue in 2023, though revenue decreased to $879.4 million in 2024. Despite this drop, the platform’s revenue remains robust, reflecting its monetization potential.

• Annual recurring revenue (ARR): ARR stood at $600 million in 2023, marking a 35 percent year-over-year increase and serving as a key driver of growth.

• Engagement: Users spend an average of 4 hours per day on the platform, highlighting its stickiness and appeal to diverse communities.

Key Milestones

• 2015: Discord was founded by Jason Citron and Stanislav Vishnevskiy as a communication tool for gamers.

• 2016: Gained traction in gaming subreddits like Diablo and World of Warcraft, reaching 10 million users.

• 2017: Launched Nitro subscriptions, initiating its monetization journey.

• 2018: Introduced server boosting and integrations with Twitch and Steam.

• 2020: Pivoted beyond gaming during the COVID-19 pandemic, spurring widespread adoption.

• 2021: Reached 150 million monthly active users and secured $500 million in funding at a $15 billion valuation, led by Dragoneer Investment Group.

• 2022: Reported $445 million in revenue, driven by Nitro subscriptions and server boosting

• 2023: Revenue reached $937.6 million, while ARR grew to $600 million.

• 2024: Revenue dropped slightly to $879.4 million but remained strong across key segments.

The COVID-19 pandemic was a pivotal moment for Discord, as social distancing measures increased the demand for virtual connection. Discord responded by introducing features like Stages (audio-only spaces akin to Clubhouse), Server Video (group video calls), Scheduled Events, and Threads. These tools not only attracted new audiences, including educators and hobbyists, but also enhanced its appeal as a versatile platform for all kinds of online communities.

Unlike many social platforms that rely heavily on advertising revenue, Discord has succeeded in developing a recurring revenue stream through Nitro subscriptions. This model not only differentiates Discord but also enhances its long-term viability. While other platforms grapple with ad-market fluctuations and evolving user privacy standards, Discord’s subscription-driven revenue provides stability and aligns with its user-first approach. As Nitro and other paid features continue to grow, Discord is well-positioned to thrive in a competitive and rapidly changing digital landscape.

Business Model

Discord’s freemium model lies at the heart of its success, offering core communication features for free while monetizing through premium subscriptions and additional paid services. This approach has allowed Discord to grow rapidly, attract a diverse user base, and simultaneously create scalable revenue opportunities.

Nitro Subscriptions

Discord Nitro, the platform’s flagship subscription service, enhances user experience through premium features. Priced between $3 and $10 per month (or discounted annually), Nitro provides value to individuals and their communities through:

• Custom emojis and avatars, usable across all servers.

• Increased upload limits of up to 100 MB, compared to 8 MB for free users.

• High-quality video capabilities, including HD screen sharing and calls.

• Server boosts, which unlock exclusive features like enhanced audio quality and animated banners.

Nitro has become a cornerstone of Discord’s monetization, contributing significantly to its annual recurring revenue.

Server Boosting

Server boosting is another critical revenue stream. Users pay $4.99 per month to unlock enhanced server functionalities, fostering a collaborative dynamic within communities. Popular servers benefit from features like:

• Improved audio quality with higher bitrates.

• Expanded emoji slots to cater to community preferences.

• Larger upload limits for smoother collaboration and engagement.

This feature exemplifies Discord’s community-first approach, aligning monetization with user-driven enhancements.

Creator Monetization

Discord has recently empowered creators to monetize their communities through tools like:

• Ticketed events, where creators charge for access to exclusive meetups or workshops.

• Paid memberships, allowing creators to offer subscription-based perks, such as gated channels or unique roles.

For these transactions, Discord takes a 10 percent cut, a competitive rate compared to platforms like Patreon or Twitch. This diversification not only attracts creators but also solidifies Discord’s position as a platform for community growth and engagement.

Why Discord’s Model Works

Discord’s monetization strategy succeeds where many social platforms fall short:

• Scalability: Free servers eliminate barriers to entry, making Discord ideal for communities of all sizes.

• Ad-Free Focus: By avoiding ads, Discord prioritizes user experience and sidesteps privacy concerns.

• Community-Centric Design: Revenue is tied to features that benefit users directly, fostering loyalty and long-term engagement.

Monetization Metrics

Despite its success, Discord’s average revenue per user (ARPU) remains low at $2.54—comparable to Reddit ($1.87) but lagging behind Snapchat ($5.75) and Facebook ($45). This low ARPU reflects Discord’s early-stage monetization and highlights an opportunity for growth through enhanced features, microtransactions, and broader creator tools.

Opportunity

Discord’s transformation from a gaming communication tool to a versatile community-building platform has unlocked substantial growth potential. By positioning itself as a leader in the emerging “Community-as-a-Service” space, Discord is tapping into several key trends shaping the future of online interactions.

Expanding Market Size

The global appetite for niche online communities is growing rapidly:

• Over 3 billion people worldwide participate in online communities, up from just 340 million in 2010.

• While 70 percent of Discord’s monthly active users still engage with gaming, its pivot to broader community types significantly expands its total addressable market (TAM).

As platforms like Facebook face engagement declines, users are gravitating toward specialized, interest-based communities—a trend that plays directly into Discord’s strengths. With 150 million monthly active users, Discord has only begun to tap into its potential audience.

AI and Superapp Potential

Discord’s integration with AI-focused communities exemplifies its ability to adapt to emerging trends. For example:

• The MidJourney community, Discord’s largest server, boasts over 15.6 million members. The entire user experience, from generating AI art to managing payments, is hosted on Discord.

• By embedding these tools, Discord has become a hub for cutting-edge applications, positioning itself as a potential superapp for virtual socializing, gaming, and productivity.

This focus mirrors the path of Asian superapps like WeChat but adapts it for global, interest-driven communities.

Monetization Levers

Discord’s ad-free model is rare among social platforms. While most competitors rely heavily on ads to sustain their businesses, Discord has prioritized subscription-based monetization through features like Nitro and server boosting. This approach fosters trust and engagement by avoiding the privacy concerns and algorithmic pitfalls associated with ad-driven platforms.

However, Discord retains the option to introduce ads strategically in the future, similar to Reddit’s late-stage adoption of advertising. If implemented thoughtfully—targeting specific communities or server types—ads could provide a significant growth lever without alienating its user base. For now, Discord’s ad-free stance sets it apart as a user-first platform in an increasingly ad-saturated market.

Beyond subscriptions, Discord has additional monetization opportunities:

• Subscription growth: Expanding Nitro adoption with enhanced features and tiered pricing.

• Microtransactions: Embedding payment systems directly into servers for ticketed events, premium memberships, and gated content.

• Bot ecosystem: With over 3 million bots built on Discord’s API, a centralized bot marketplace could unlock additional revenue streams.

Long-Term Growth Drivers

Discord’s ability to sustain growth without relying on ads underscores its unique positioning. Companies like Reddit and Snapchat have struggled to diversify revenue away from advertising, but Discord’s model proves that platforms can thrive by focusing on recurring revenue streams. As the platform continues to expand its user base and enhance its features, it has the flexibility to grow without ads or incorporate them later as an incremental revenue source.

As digital communities increasingly replace traditional social media experiences, Discord’s ad-free, subscription-first model prioritizes engagement, trust, and user experience. By focusing on interest-based groups and providing tools for monetization, Discord is poised to become a cornerstone of the new internet economy.

Competitors

Discord operates in a crowded space where communication and community platforms compete for user engagement and loyalty. Its key competitors include platforms like Reddit, Telegram, Slack, and Twitch, each targeting overlapping but distinct user bases. Discord’s ability to differentiate itself lies in its focus on community building, ad-free monetization, and flexibility across use cases. However, the sheer volume of competitors poses a significant challenge, requiring constant innovation to maintain its leadership position.

Reddit

Reddit, often referred to as the “front page of the internet,” serves as a platform for text-based discussion across countless interest groups. While Reddit’s forums (subreddits) parallel Discord’s servers, the two platforms diverge in functionality:

• Reddit relies on advertising for most of its revenue, whereas Discord prioritizes subscriptions and direct user monetization.

• Reddit’s engagement is typically asynchronous, while Discord thrives on real-time interaction and voice/video integration.

Despite Reddit’s larger user base and strong engagement metrics, Discord’s ad-free, community-focused model provides a distinct advantage, particularly for users seeking a more immersive experience.

Telegram

Telegram competes with Discord in offering free, feature-rich communication tools. Telegram has a significantly larger user base, with over 700 million monthly active users, and has gained popularity for its privacy features. However:

• Telegram lacks the same focus on community building, prioritizing direct messaging over server-based collaboration.

• Discord’s premium features, like Nitro and server boosting, offer greater flexibility for creators and community leaders.

While Telegram appeals to individual users, Discord’s strength lies in facilitating group collaboration and niche communities.

Slack

Slack dominates the workplace communication market, offering tools tailored to professional environments. However, Slack’s focus on productivity limits its ability to attract the broader, interest-driven user base that Discord serves.

• Slack’s pricing model can be restrictive for large, non-corporate communities, where Discord’s freemium approach shines.

• Discord’s integrations with platforms like Twitch and AI tools cater to creative and hobbyist audiences, further distinguishing it from Slack.

As Slack solidifies its dominance in professional spaces, Discord is carving out a niche among creators, gamers, and interest-based groups.

Twitch

Twitch, a leader in live-streaming, overlaps with Discord in its focus on gaming communities and creator ecosystems. However:

• Twitch centers on content creation and viewer engagement, while Discord prioritizes real-time communication and collaboration.

• Discord’s monetization tools, such as server boosting and ticketed events, offer creators more direct ways to engage with their communities outside of streaming.

Twitch excels in public broadcasting, but Discord provides a private, interactive space for creators to connect directly with their audience.

The Risk of Intense Competition

While the competitors listed above represent some of the most prominent platforms, the reality is that Discord faces competition from a wide range of players in the communication and community space. Emerging platforms with innovative features and niche focuses frequently enter the market, challenging even established leaders.

Discord has been around long enough to solidify its position as a leading platform, but longevity alone is not enough. The company must continue innovating, refining its user experience, and expanding its offerings to maintain its edge. Even slight missteps or a failure to adapt to changing user needs could erode its leadership position in this highly competitive environment.

Valuation and Investor Growth

Discord has raised significant capital across multiple funding rounds, supported by prominent investors like Index Ventures, Dragoneer Partners, and Accel Partners. Index Ventures participated in several rounds, including Series G and Series E, signaling strong confidence in the platform’s potential.

Discord’s valuation increased from $22 million after its Series A in 2014 to $15.2 billion following its Series I in 2021. In the private secondary market today, its valuation has declined to $6.62 billion, with 2024 revenue reported at $879 million. This results in a revenue-to-valuation multiple of 7.53x, down from previous years and significantly lower than some competitors. This lower multiple may present a value opportunity, especially given Discord’s recurring revenue model and continued growth.

Peer Comparisons

Discord’s valuation is lower than some of its key competitors:

• Reddit: With $1.12 billion in revenue and a market cap of $30.78 billion, Reddit’s revenue multiple is 27.5x, driven by market expectations and advertising reliance.

• Snapchat: Reporting $5.17 billion in revenue and a valuation of $18.21 billion, Snapchat’s revenue multiple is 3.52x, reflecting challenges in balancing growth and profitability.

Discord’s current multiple of 7.53x sits well below Reddit’s but above Snapchat’s. This lower multiple, combined with its recurring revenue model, offers potential value for investors seeking opportunities in platforms with stable and growing revenue streams.

The secondary market price per share is now similar to when Index Ventures invested in 2020, even though Discord’s revenue has grown nearly sixfold since that time. This discrepancy highlights a potential undervaluation relative to the company’s operational progress.

Dragoneer Partners and Accel Partners also played key roles in funding Discord. Dragoneer led the Series I round, valuing the company at $15.2 billion, while Accel has been involved since the Series B round. Their continued participation underscores confidence in Discord’s long-term viability.

Despite current valuation declines, Discord has maintained strong revenue growth and user engagement. Its subscription-first monetization model, combined with opportunities to expand ARPU and additional monetization channels, positions the platform for further growth.

Pros and Cons

How to Invest

Investors looking to gain exposure to Discord have several potential avenues, especially through private secondary markets, where the company’s shares trade relatively frequently. Platforms like Forge Global, Hiive, and EquityZen tend to have consistent listings for Discord and should be monitored. At the moment, Forge has Discord shares available at $240 per share. Hiive offers shares at prices as low as $215 per share for a block of around $55,000. This represents favorable terms but comes as a forward contract, suitable only for those with strong conviction in the deal. Another block of shares is listed on Hiive at $235 per share for approximately $61,000, presenting an interesting opportunity for investors seeking exposure at slightly higher liquidity. T

These deals provide access to Discord at prices around the current secondary market valuation of $6.62 billion listed throughout this article. However, private market transactions involve unique risks and require careful consideration of terms, especially forward contracts.

If you’re interested in investing but find the current minimums out of reach, let us know at [email protected], and we’ll keep you informed as new opportunities open up.

What to Know Before You Invest

• Accredited investors only.

• High minimums, often in the six-figure range.

• Trust platforms like Hiive, Forge, and Augment Markets for reputable transactions.

• Be patient; private market deals can take time to close.

As always, if you want us to clarify anything in this material, shoot us an email at [email protected], and we’ll respond as soon as we can.

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