BeReal Acquisition Analysis

Voodoo acquired BeReal for €500M.

This feels like News Corp buying Myspace, if it were 3 years too late.

BeReal burst onto the scene in 2020, exciting a new generation of social media users with its spontaneous prompts and unfiltered posts from friends.

It got a lot of things right, including...

✅ Pioneering the dual camera format, allowing users to share what they were doing and their reactions.

✅ Building a globally recognizable brand, which similar apps like Dispo and Poparazzi never managed.

✅ Capitalizing on Gen Z's interest in more raw, authentic social content.

✅ Creating virality and growing an engaged user base.

But it also faced a number of challenges...

❌ BeReal was a feature, not a product. The company failed to innovate beyond its dual camera format, which was easily copied by competitors, like TikTok Now and Instagram's Candid Challenges.

❌ BeReal never developed a monetization strategy, which would give it a path to sustainable growth and longevity.

❌ It didn't embrace creators and brands. BeReal fashioned itself as more of a messaging platform (a la Snap) or traditional social network, both of which are viable business plans, but the most successful social apps have evolved to become content platforms for creators and brands.

❌ It should have leaned into its "anti-Instagram" reputation and built the premier social platform for Gen Z and Gen Alpha.

How does this compare to other social media acquisitions?

It's a drop in the bucket relative to other platform deals:

Google $1.65B acquisition of YouTube (2006)
Facebook's $1B acquisition of Instagram (2012)
Yahoo's $1.3B acquisition of Tumblr (2013)
Amazon's $970M acquisition of Twitch (2014)
Facebook's $19B acquisition of WhatsApp (2014)
Microsoft's $26.2B acquisition of LinkedIn (2016)
Elon's $44B takeover of Twitter (2022)

How should we think about BeReal's valuation?

Despite being 4 years old, the company is still pre-revenue, so we can't rely on traditional revenue and EBITDA multiples. But we can look at usage comps.

Voodoo claims BeReal has 40M monthly active users (MAU), half of whom use the app at least 6 days a week.

They paid EUR €500M, or roughly USD $537M, for BeReal, which works out to $13.43 per user.

And how does that compare to other social platforms?

Let's look at Enterprise Value (EV) divided by Monthly Active Users (MAU) for publicly traded social companies:

Instagram: $567.6B EV / 2B+ MAU = $283.80 per user
Facebook: $678.9B EV / 3B+ MAU = $226.30 per user
Pinterest: $29.9B EV / 500M+ MAU = $59.80 per user
Snapchat: $25.6B EV / 800M+ MAU = $32.00 per user
Reddit: $10.1B EV / 850M MAU = $11.84 per user

But keep in mind that all of these companies already generate revenue, to the tune of hundreds of millions to billions each year! BeReal has yet to make a dime.

That didn't matter to BeReal's investors though. The company raised a total of $89.7M over 3 rounds:

Seed: $1.8M at a $7.8M pre-money valuation (May 2021)
Series A: $28.5M at a $95.1M pre-money valuation (Jun 2021)
Series B: $59.4M at a $526.5M pre-money valuation (Apr 2022)

As a result, we estimate BeReal's Seed investors earned a nice 38.8x return, compared to only 3.9x for Series A and 1.0x return for Series B investors (assuming a 1.0x liquidation preference). It certainly pays to get in early!