Chat Startup Discord Rejects Takeover Approach From Microsoft, Considers IPO

By Avi Ben Ezra Wednesday, April 21, 2021

Discord, a messaging startup company focused on video gamers, has halted negotiations to sell itself to Microsoft and other potential buyers. Instead, the messaging startup is considering launching an IPO, or initial public offering, in the future, the Wall Street Journal reports.

A 'No Sale' sign on a vintage cash register.

Company Considers Going Public

Last month, reports emerged that Microsoft had been holding business talks with Discord to acquire the chat startup company in a $10 billion business deal. Microsoft has reportedly walked away from the deal, for now, but the two companies might restart talks down the line. Bloomberg adds that the Microsoft offer stood at $12 billion.

Apart from the tech business titan, at least three more companies were interested in acquiring Discord, according to the WSJ. However, the startup company is reportedly happy with its business performance and has decided to remain independent at the moment.

The startup company runs a platform for voice chat, video, and messaging, which is particularly popular among gamers. Discord, which was founded in 2015, has received a significant boost amid the COVID-19 pandemic as people were forced to stay at home.

While Discord is essentially a VoIP and chat platform, the majority of its users are gamers that use it to communicate with each other when playing video games. The chat business claims its monthly user base doubled to roughly 140 million in 2020. The company reported it garnered $130 million in business revenue last year, up from $45 million a year before. However, the company still hasn’t reached profitability.

Following the last financing round in December, Discord has doubled its business valuation to $7 billion. To date, the company has raised about $480 million in total funding from investors Greenoaks Capital, Greylock Partners, and Index Ventures.

Last month, Discord appointed its first CFO, Tomasz Marcinkowski, to help accelerate its IPO plans. The move comes after the chat platform has seen substantial growth in both users and revenue, helped by the pandemic.

Marcinkowski, a former Pinterest executive, took over as Discord’s CFO on March 9, the company said. Before Pinterest, Marcinkowski worked at Goldman Sachs for nearly ten years, where he served as an advisor to major companies including Square, Yahoo, Yelp, and more.

When it comes to Microsoft, the takeover of the chat startup would have helped the tech company grow its presence in the social media market. Discord users claim that the platform’s voice chat services are superior to those of Xbox and Skype, also owned by Microsoft.

Startup Savant reported last month that Microsoft acquired the AI (artificial intelligence) speech-recognition company Nuance Communications in a business deal worth $16 billion.

Microsoft has been looking to attract more consumers lately and has been hunting for new business acquisitions since. The tech business failed to acquire TikTok last year and has also dropped its plans to acquire video game livestreaming platform Mixer.

Still, Microsoft’s interest in Discord doesn’t come as a surprise as the tech behemoth made multiple business acquisitions over the past few years, including the acquisition of the video game company ZeniMax Media in a $7.5 billion deal.

Summary

The messaging startup Discord has reportedly halted business negotiations with Microsoft and other potential buyers as it leans toward going public as an independent company.

About the Author


Headshot of Avi Ben Ezra

Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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