It’s hard to understate the buzz around Clubhouse, the social media startup that reached a reported $100 million valuation when it had just 1,500 users.
Now some nine months after its launch, the company revealed over the weekend that it had raised another round of funding led again by Andreessen Horowitz’s Andrew Chen. While the company did not disclose a valuation, a source familiar with the matter says the company is now valued at $1 billion even though it has yet to post a revenue. The Information previously reported that the company had received interest to raise at the unicorn status.
Free to all users and currently operating without ads, Clubhouse currently boasts an estimated 2 million weekly active users on the back of its voice-based chatrooms. With the additional funding, the company says it plans to create an Android app, start a program that allows creators to get paid via tips and subscriptions, and invest in tools to detect and prevent abuse.
The final part will be crucial. The funding round comes at a time when social media companies are trying to find the tricky balance between content moderation and free speech. Clubhouse has been no stranger to the problem in its rapid rise: Among the controversies includes one chatroom titled “Anti-Semitism and Black Culture” that drew accusations from some over perpetuating racial stereotypes and anti-Semitism.
And as if to counter questions of whether the app, which is invite-only, could scale beyond its Silicon Valley roots, the blog post announcing the news of Clubhouse’s raise emphasized diversity. Signed by founders Rohan Seth and Paul Davison, the note read that “musicians, scientists, creators, athletes, comedians, parents, entrepreneurs, stock traders, non-profit leaders, authors, artists, real estate agents, sports fans” and over 180 investors were “large and small, spanning many different races, genders, and areas of expertise, and including many members of our early community.”
AN E-CIGARETTE MAKER SOARS: It’s hard to forget the incredible rise and fall of vaping startup Juul. Buoyed by consumers who viewed the product as a safe alternative to traditional smoking and by Big Tobacco companies that believed it was the future of the industry, the company shot to a $38 billion valuation in late 2018. But amid regulatory scrutiny, lawsuits over its marketing practices, and questions about the healthiness of vaping as a practice, Marlboro maker Altria cut its estimated value on Juul to $5 billion in late 2020.
But that’s only in the U.S. On Friday, another e-cigarette company tested itself on public markets—and soared. RLX Technology, a Beijing-based vaping company backed by Sequoia Capital China, debuted on the New York Stock Exchange with a bang: It closed the day with shares up 158% and is now valued at about $50 billion.
That’s for a company that posted net income of $16.7 million and a revenue of $324.2 million in the nine months ending Sept. 30.
Founded in 2017, RLX, like Juul, has faced a broad blowback against tobacco products: In late 2019, the Chinese government banned online advertisements and sales of e-cigarette products—a category making up 30% of the company’s revenue in the first nine months of 2019.
But regulation or not, cigarettes are a product that users will do anything to get. And despite attempts from the government to regulate the industry, China remains the largest consumer of tobacco in the world with 300 million smokers in the country, according to the World Health Organization.
While online sales fell to zero, RLX has more than made up for the difference with in-person sales: Revenue almost doubled in the first nine months of 2020 compared to the same period the year earlier, even as the coronavirus was linked to vaping. And though much of the world moves online in the pandemic, RLX appears to be one that will stick to brick-and-mortar as its growth strategy. The company in Jan. 2020 announced plans to open 10,000 new locations worldwide.