The BeReal Business Model – How Does BeReal Make Money?

Executive Summary:

BeReal is a social media platform that enables users to share one photo per day with their friends. The app incentivizes people to stay in touch through regular communication.

BeReal does currently not make any money. The business is being financed by venture capital investors instead.

What Is BeReal?

BeReal is a social media platform that enables users to share one photo per day with their friends. The app incentivizes people to stay in touch through regular communication.

This is how it works: first, you register an account on the platform and invite your friends to join. After they created a group, users will receive a notification prompting them to share a photo within the next two minutes.

The platform will, from time to time, also host special challenges which can be completed individually or in a group.

Once the time is over, the photos are shown in sequential order. Everyone has the chance to react by writing a comment or posting an emoji.

Photos are taken within the app, which is made possible by BeReal’s specially designed camera. Apart from sharing a photo with friends, one can also publicly share a BeReal, allowing them to discover what people around them are up to.

All of the BeReal photos that have been uploaded throughout a user’s lifetime can be accessed in a dedicated ‘Memories’ section.

The BeReal platform can be accessed by downloading its mobile application, which is available for Android and iOS devices.

A Short History Of BeReal

BeReal, which is headquartered in Paris, France, was launched in December 2019 by Alexis Barreyat and Kévin Perreau.

The two founders met each other when they attended the French coding school 42 born2code, which was started by billionaire Xavier Niel.

After graduating from university in 2017, they each went to work for different companies. Perreau did more than four years of digital consulting at Opteamis while Barreyat went on to produce content for GoPro.

They launched the first version of BeReal in December 2019. For most of 2020, they were busy refining the app, which recorded a few hundred downloads every month up until September.

Their patience would soon pay off, though. By the end of 2020, downloads began to spiral and the young startup finally entered its ‘hockey stick growth’ phase.

From early 2021, monthly downloads spiraled to tens of thousand a month. It can be assumed that most of that growth originated from word-of-mouth, namely users inviting their friends to join the platform.

Another major growth accelerator for BeReal has been its college ambassador program, which was started around that time. It invites college students to promote the app across their campus. This has ultimately allowed BeReal to grow in the United States after initially dominating the French app stores.

Investors would soon take notice as well. Allegedly, Xavier Niel’s son began to use the app, which is how the billionaire investor first heard of it. His investment firm Kima Ventures as well as an associated fund named New Wave signed a term sheet with the founders in May 2021.

However, those negotiations weren’t concluded when news about the app’s rising popularity made it all the way to Silicon Valley. Weeks later, in June, world-class investors Andreessen Horowitz (which had followed a similar formula when it invested in Clubhouse), Accel, and DST agreed to pour another $30 million into BeReal.

BeReal’s founders used the additional funds to significantly ramp up their hiring efforts. The company, as a result, grew from just the two founders to dozens of employees in a matter of weeks.

The app’s downloads followed accordingly. Hundreds of thousands of people would install the app every month. Various media outlets caught on to the app in early 2022, which further boosted its prominence.

BeReal, throughout the summer, rose to the top of various App Store charts. In mid-July, for example, it managed to reach the top of Apple’s U.S. charts. Close to two million people installed the app during the first week of July alone.

Unfortunately, the rapid growth also had its drawbacks. The app, because it asks users to be online at the same time, would often crash under the heavy load. As a result, users would have to close and reboot the app multiple times.

And just weeks later, BeReal received the biggest nod of approval. Instagram, much like with Snapchat’s Stories, quietly introduced a new feature called Dual. The feature allows users to take disappearing photos using the front and back cameras simultaneously. Competing platforms like Snapchat and TikTok followed soon after.

As of today, BeReal is one of the most popular apps in a variety of countries. The company’s staff has grown to over 150 full-time employees.

How Does BeReal Make Money?

BeReal does currently not make any money. It is able to finance the business by raising money from outside investors.

Just like the many social media apps that came before it, including Clubhouse, Facebook, Snapchat, or Yik Yak, BeReal’s founders have opted against monetizing the app in its early stages.

The thinking behind that strategy is to amass as many users in as little time as possible. Once BeReal becomes a staple in the user’s daily routine, it becomes much easier to introduce monetization.

The most realistic option is the introduction of image- or video-based advertising, which is displayed between the pictures that your friends send you.

Those ad earnings can potentially be lucrative since users will want to see what their friends are up to and are thus highly engaged. As a result, advertisers benefit from serving ‘real’ ad impressions, meaning people actually watching the content.

Another alternative might be sponsored challenges. Brands would have the chance to promote challenges that are akin to their products and services. Those brands would then pay BeReal a fixed fee in exchange for the platform running that challenge.

Interestingly, BeReal might decide to go the other route and avoid monetizing via ads altogether. According to the Financial Times, BeReal’s founders are contemplating to introduce paid features and subscriptions instead.

A similar monetization model has been adopted by the likes of Telegram, which also offers subscriptions and premium features.

Lastly, BeReal might simply be sold at a later stage to integrate its product into a larger platform. Facebook’s purchase of Instagram is the most prominent example. For the longest time, many social media startups were actually started with the premise to be sold to a larger platform.

However, due to increased regulatory pressure, those established platforms are now limited when it comes to acquiring potential competitors. Facebook’s $400 million purchase of GIPHY (March 2020), for example, is still awaiting regulatory approval.

Luckily, there still seems to be an exit market and companies willing to scoop up smaller startups. Twitter, for example, bid $4 billion to acquire Clubhouse back in March 2021.

Flipagram and Musical.ly were both sold to Chinese news reading app Toutiao, which in turn is owned by ByteDance. ByteDance integrated portions of those purchases into TikTok, which it launched in August 2018.

BeReal Funding & Valuation

BeReal, according to Crunchbase, has raised a total of $30 million across two rounds of venture capital funding.

The young company counts world-class investors such as Accel, Andreessen Horowitz, DST Global, and others as backers.

Since BeReal remains in private ownership, it is not obligated to disclose its valuation to the public. However, various reports about the firm’s last funding round have said that BeReal was valued at $150 million during the funding round.

Who Owns BeReal?

Alexis Barreyat and Kévin Perreau, the founders of BeReal, remain the largest shareholders of the company.

As stated before, the company had been valued at $150 million during its last funding round, which netted them $30 million.

This means that they gave up 20 percent of the company (= $30 million / $150 million). A month prior, BeReal raised a seed round at a €10 million valuation.

Unfortunately, it was not disclosed how much in funding the founders raised. Given that the two founders were the only ones working on the product at the time, it can be assumed it won’t have been more than €2 million.

This would mean that they, at best, sold another 20 percent of the company (= €2 million / €10 million). As a result, they still earn at least 60 percent of the company.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.