Deal Dive: BeReal got its best-case scenario exit

There has been a lot of bad news about social media startups lately. Multiple companies, including Twitter alternative Post News, and IRL have shut down. And ShareChat’s valuation has dropped more than 50% after a recent funding round. But amid the negative headlines, the recent exit of French social network BeReal looks like a bright spot.

BeReal, which alerts users that they have two minutes to “be real” by taking both a front-facing photo and a selfie, was acquired by Voodoo, a French mobile game and app unicorn, for €500 million ($537 million) this week.

This deal values BeReal at a minor haircut off its last valuation of $587 million in April 2022. BeReal raised capital from venture firms, including Accel, Andreessen Horowitz and Coatue, among others. The startup currently has 40 million active users, half of whom use the app at least six days a week, according to a press release regarding the acquisition. Reports peg daily users to be around 25 million.

Despite the company’s popularity, its user growth has largely plateaued in recent months, and BeReal was not in great financial shape leading up to this deal. In March, at an all-hands meeting, BeReal employees were told that the company only had about 10 months of runway left and would either need to raise more or be acquired to keep going, according to Business Insider.

Well, the company got its wish.

The relationship between Voodoo and BeReal began years ago when Voodoo helped BeReal expand to the U.S., Voodoo co-founder and CEO Alexandre Yazdi told TechCrunch. Yazdi added that BeReal is currently the only social media platform that he uses.

He also said that he is aware of the company’s recent struggles to grow its users, especially amid a drop-off in the U.S., but he’s confident that the base product is good enough to sustain the company — it just needs some new features and a little help, he says.

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“BeReal is the most successful social media that has been created in the last eight years,” Yazdi said. “They have really created something unique. Their success showed that users really craved more authenticity. They have 40 million users and the vast majority post six days a week. That’s a strong baseline and basis to build on.”

Yazdi said that Voodoo, which has built three social networks of its own, is the perfect partner to “write the next page of the story.” Yazdi said they plan to roll out features like messaging and video to the platform as a way to boost user engagement.

He also said that they plan to incorporate ads into users’ feeds. BeReal had yet to monetize thus far, but Yazdi said they will fit BeReal’s mission of authenticity and be designed to not be disruptive to users.

There is a lot of good about this deal. For one, it’s likely the only way BeReal would be able to keep operating, and as someone who still uses it on the regular, that is worth celebrating on its own. So anything that gives BeReal the capital and support it needs to tackle some issues and potentially get back on the path of growing users, while also starting to take in revenue, seems like the best-case scenario for a startup that very easily could have just had to close up shop.

Plus, Voodoo seems like a nice home for the app. The company has built and run social platforms of its own, and Yazdi is passionate about the actual product. This is not what a typical acquisition looks like, where a company is seeing stalled growth and financial struggles.

I’m a little more hesitant on the company’s plans to monetize, however. Making money through ads is a natural choice for social media companies, but I worry about how existing users will feel about ads, the exact opposite of “authentic” photos of their friends, and if that could put a wrinkle in the company’s plans to lure people back.

While I get that social media startups have only so many ways to monetize, most people aren’t willing to pay for it, as X has repeatedly found out. And users don’t seem to love the growing number of ads on X or Instagram either. I’m also not sure the addition of chat or the ability to post video will be enough to persuade users to come back, especially if they return to a feed threaded with ads.

But Yazdi is confident that the company will get back to growing because of how differentiated its strategy really is. He says that it will be a challenge to get BeReal to where they want it, but a worthy one, while keeping the “mission” of the startup at heart.

“We are never going to break that DNA of authenticity,” Yazdi said. “This is the BeReal. We are not going to touch that DNA.”

Users will be the judge of that.