There's been a lot of bad news about social media startups lately. Several companies have shut down, including Twitter alternatives Post News and IRL, and ShareChat's valuation dropped by more than 50% after its latest funding round. But amid all the negative news, the recent exit of French social network BeReal looks like a silver lining.
BeReal, which takes full-face photos and selfies and alerts users to be “true to themselves” within two minutes, was acquired this week by French mobile games and apps unicorn Voodoo for 500 million euros ($537 million).
The acquisition values BeReal at a slight discount from its previous market cap of $587 million in April 2022. BeReal has raised funding from venture firms including Accel, Andreessen Horowitz and Coatue. According to a press release about the acquisition, the startup currently has 40 million active users, half of whom use the app at least six days a week. Daily users are reported to be around 25 million.
Despite the company's popularity, user growth has remained fairly steady in recent months, and BeReal's financial health was poor leading up to the acquisition: During a company-wide meeting in March, BeReal employees were told the company only had 10 months of funding left and would need to raise more money or be acquired to survive, according to Business Insider.
Well, the company got its wish.
Voodoo's relationship with BeReal began several years ago, when Voodoo helped BeReal expand into the U.S., Voodoo co-founder and CEO Alexandre Yazdi told TechCrunch, adding that BeReal is the only social media platform he currently uses.
He also said he knows the company has struggled recently to grow its user base due to declines, especially in the U.S., but he believes the base product is of good enough quality to support the company and just needs a few new features and a little help.
“BeReal is the most successful social media platform built in the last eight years,” Yazdi says. “They've built something truly unique. Their success shows that users are looking for more authenticity. They have 40 million users, most of whom post six days a week. That's a strong baseline and foundation to build on.”
Yazdi said Voodoo, which has built three of its own social networks, is the perfect partner to “write the next page of our story.” Yazdi said the company plans to roll out features such as messaging and video to the platform as a way to increase user engagement.
He also said there are plans to incorporate advertising into users' feeds. While BeReal hasn't yet monetized it, Yazdi said ads will fit with BeReal's mission of authenticity and will be designed to be unobtrusive to users.
There's a lot to like about this deal. First, it's likely the only way BeReal can continue to operate, and as someone who still uses BeReal regularly, that alone is worth celebrating. So, getting the capital and support BeReal needs to address some of its issues and potentially get back on track with user growth, and start generating revenue, seems like the best-case scenario for a startup that could have easily been forced to close shop.
Plus, Voodoo seems like a good home for the app: The company built and runs its own social platform, and Yazdi is enthusiastic about the actual product. This isn't the typical acquisition that leaves companies with stagnant growth and financial difficulties.
However, I am a bit hesitant about the company's monetization plans: while monetizing through advertising is a natural choice for a social media company, I worry about how existing users will feel about ads that are the polar opposite of “real” photos of their friends, and whether that could hurt the company's plans to bring users back.
I understand that social media startups have limited avenues for monetization, but as X has repeatedly found, most people aren't willing to pay for it. Also, users don't seem to like X or Instagram's ever-increasing advertising. It's unclear whether adding chat and video posting features will be enough to lure users back, especially after they've returned to the ad-lined feed.
But Yazdi is confident the company will get back on track for growth given how differentiated its strategy is. He says it will be challenging but rewarding to lead BeReal to where they want to be while keeping the startup's “mission” in mind.
“We're not going to destroy the DNA of that authenticity,” Yazdi said. “This is BeReal. We're not going to touch that DNA.”
It's up to the user to decide.