How does Telegram make money to support itself?

Telegram is an open-source messaging program that has no form of market-based financial gain. Unlike other platforms, it doesn’t have a megacorporation behind it, it doesn’t run ads or sell user data to raise money, so many people wonder: how does Telegram make money?

Currently, Telegram survives thanks to donors and funds created specifically for the maintenance of the program. Much of the money for the messenger comes from the CEO himself, Russian Pavel Durov, a global entrepreneur who founded the largest social networking platform in Russia, VK. As he claimed to live under constant surveillance by the Russian government, Pavel wanted to develop a tool for people to communicate securely and privately.

He then took a good part of the funds raised at VK to inject into Telegram. The proof of this is that the network managed to keep everything running from 2013, when the first prototype of the app appeared, until 2018 only with its own investment and user donations.

necessary investments

With the increase in the base of people using the app, there was obviously an increase in the costs necessary to maintain the system, such as expanding the server infrastructure and investing in the creation of new features. According to the CEO, it takes “a few hundred million” dollars a year to keep things going.

As a result, the app raised around US$2.7 billion in two rounds of funding from companies specializing in funding technology projects. According to Crunchbase, the most notable investors include Oyster Ventures, Dalma Capital, ARK Fund and Abu Dhabi Catalyst Partners, as well as prime moneymaker Mubadala Investment.

In March 2021, Telegram raised US$1 billion (approximately R$5.7 billion in current values) from the sale of bonds to foreign investors. Of this amount, US$ 150 million came from the Mubadala sovereign wealth fund and Abu Dhabi Catalyst Partners in pre-IPO 5-year convertible bonds – an investment model for companies that have not yet gone public.

As a IPO project has never advanced, the amounts collected and Telegram’s operating models are kept in corporate secrecy.

Attempt to create recurring income

In order to generate some fixed revenue, the app plans to introduce some premium plans aimed at those who want to use Telegram for business. The monetization strategy is similar to that adopted by WhatsApp in the launch of the Business version, of charging fees to medium and large companies that want exclusive features.

Another way Telegram can monetize its service is through paid stickers with “additional expressive features”. “Artists who make stickers of this new type will also have a share of the profit. We want millions of Telegram-based creators and small businesses to thrive, enriching everyone’s experience,” explained Durov.

In 2021, the platform announced a different ad model than the traditional one, aimed at large groups of more than a thousand people. The Telegram Ad Platform, as it was christened, will allow people and companies to take advertising to public channels, but without interfering with private conversations or users’ privacy. These “sponsored messages” must be linked to the topic discussed in the groups and will generate revenue for the messenger and for the administrators.

To avoid the ads that will soon arrive on the platform, users will be able to opt for a “cheap” paid subscription, CEO Pavel Durov announced on one of his messenger channels. It is not yet clear what the value would be, but it would possibly be a new source of extra income.

Attempt to enter the crypto world

In 2019, Telegram even considered launching the platform on the blockchain to raise money by selling tokens and offering payments through the app. Two weeks before the premiere, scheduled for October 31, 2019, the US Securities and Exchange Commission (SEC), equivalent to the Securities and Exchange Commission, barred the transaction.

The regulator said Telegram never registered its offer with the SEC and while it still raised “only” $425 million (out of $1.7 billion in total) from US-based investors, the deal had to be cancelled. After an unfavorable court ruling, in May 2020, Telegram abandoned the project altogether after failing to reach an agreement.

Telegram Foundation

To remain faithful to the project’s mission, of not accepting any type of external investment or source of recurring revenue, the company chose to operate in a foundation format, in which donations from users or angel investors keep the project running. Today Telegram works on a model very similar to Wikipedia, from the Wikimedia Foundation, and Firefox, from Mozilla.

“We are not going to sell the company like the founders of WhatsApp. The world needs Telegram to remain independent as a place where users are respected and high quality service is guaranteed.”

“Telegram will start generating revenue from next year. We will do this in line with our values ​​and the commitments we have made over the past seven years. Thanks to our current scale, we will be able to do this in a non-intrusive way. Most users will hardly notice any change”, assured Durov on his channel.

Although it has its plans to try to support itself without depending on the money of others, one of the most popular chat programs in the world remains on the basis of the trust of its supporters. It is a risky model, but one that has proved valid until today, possibly one of the reasons why Telegram is the darling of so many people.

Source: CrunchBase, Pavel Durov

Leave a Comment