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Discord, the maker of a popular voice communications app for games, has raised $20 million in a round of funding headed by Greylock Partners.
The funding is a big turnaround for a company that was written off in gaming. And it shows that by pivoting to something that was more popular, the original founders figured out how to save the company and thrive in the new world of mobile gaming.
Existing investors include Tencent, Benchmark, and YouWeb. The $20 million round is a big one, but Discord is getting a lot of traction. It now has 2.9 million users, and there are more than 1 million players signing up each month. The product has been available for only seven months, and people are already sharing 300 million messages a month on it.
Top Twitch streamers, such as Lirik (with 1.2 million followers) and GoldGlove (1 million followers), are using Discord. So is the Star Citizen community (based on the upcoming sci-fi game from game pioneer Chris Roberts).
Three top investment pros open up about what it takes to get your video game funded.
Discord started its life as Hammer & Chisel. But that company didn’t have much luck with its pioneering iPad game, Fates Forever. It launched in 2014 as a mobile take on the popular multiplayer online battle arena (MOBA) games. It won a lot of praise, but it didn’t get traction with players.
So Jason Citron, the founder of Hammer & Chisel, made the tough choice of shutting the free-to-play game down and pivoting to something new. It was an emotional time, but the team came through, he said. The result was Discord, a free voice-communication chat app for multiplayer mobile games.
The app is in alpha testing now, and it is getting a lot of attention from players who want a reliable way to talk to team members during a game — and who also want better security. Citron hopes it will make a splash in the $1.7 billion voice chat market, which is growing within the larger esports professional gaming market.
“We think it’s a necessary, missing piece for the esports movement,” Citron told GamesBeat last fall.
Discord is planning to use the money to hire more staff.
Citron’s Hammer & Chisel went through YouWeb’s 9+ incubator, which provided initial funding. Early investors included Accel, TWI, and IDG. Then the company raised another round of funding earlier this year from Silicon Valley venture capital firm Benchmark Capital and Chinese Internet gaming company Tencent. Citron, in particular, got a lot of attention for his new startup because he built Aurora Feint, later called OpenFeint, in the early days of the Apple App Store and then sold it to Gree in 2011 for $104 million. That was an extraordinary, fast-moving experience for an entrepreneur who had a big pay day at the age of 26.
But with Hammer & Chisel, his first move wasn’t a success.
“We were very careful in spending our money,” Citron told GamesBeat last September. “We are an experienced team. We’ve done this before. We spent enough to get Fates Forever out. It was clear it wasn’t going to be a big business. We didn’t burn a lot of money on marketing.”
During the process of creating Fates Forever, the team noticed that voice and text chat for mobile hadn’t advanced. Over the past decade, there hadn’t been much progress as voice chat moved from the PC to mobile. So the team started experimenting.
“Out of that, we built Discord,” Citron said.
Others have devised ways to handle game communication, such as Curse, Skype, C3, Hipchat, and Teamspeak. But none of them were that satisfying to the Discord team. In fact, you can think of Discord as a mashup of two useful tools.
“If you think Skype and Teamspeak had a baby and it had all sorts of superpowers that its parents didn’t have,” Citron said. “What was basically a skunkworks project appears to be the most promising product we’ve built.”
Citron said that Discord became popular because it has low-latency communication, or minimal delays between when someone says something and another person hears it.
For much of 2015, the company worked on Discord. The networking infrastructure is built in Erlang, a technology that Ericsson created in the 1980s for telecommunications. The system is spread across nine data centers around the world. The company has done tests to make sure that the latency is good.
Discord noticed that esports competitors — or professional gamers who play games for money prizes — were worried about security. With Skype, it’s easy to get somebody else’s personal internet protocol (IP) address because the communication happens peer-to-peer. Citron said that Discord works through server infrastructure, so it’s impossible for anyone to obtain another player’s IP address. If a voice server in the distributed cloud gets attacked by someone flooding it with data, it shifts the communication to another server.
Discord runs in a browser or as an app. So getting into the chat is easy as all you have to do is share a link and type in your username.
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