Why are investors seeking to invest in Clubhouse at $1 Billion Valuation?

I hear that a lot of investors are fighting to invest in the social audio app, Clubhouse. According to “The information”, Venture Capital firms approached the startup’s founders in recent weeks about leading its potential next round of funding at a roughly $1 billion valuation.

The investors also tried buying Clubhouse shares from existing shareholders at an implied valuation of $1 billion. Mind you, this is 10 times higher than the app’s valuation from eight months ago following a hotly contested investment round, before it was even available on Apple’s App Store. Clubhouse raised a Series A funding round from Andressen Horowitz in a deal that includes $10 million in primary capital and at least $2 million in secondary shares, valuing the company at or just above $100 million

Now some of you readers, may be wondering what is so cool about this new app that is still in beta stage and not available on Google Playstore.

What is Clubhouse?

Clubhouse is an invitation-only audio-chat social networking app launched in 2020 by founders, Paul Davison and Rohan Seth. According to the company, it is a new type of social product based on voice. It allows people everywhere to talk, tell stories, develop ideas, deepen friendships, and meet interesting new people around the world.

Clubhouse has built its reputation, in part, on exclusivity. You cannot just sign in, you have to be invited by someone already in the Clubhouse.

Once in the clubhouse, you can jump from one chat to another, on different topics. You can decide to join in the discussion or simply listen to the gist. Groups are formed around hobbies, cultures, careers, and curiosities. 

I hear a lot of celebrities have joined such as Drake, Oprah Winfrey, Chris Rock, or Ashton Kutcher, have joined the Clubhouse so chances are that you might bump into them in any of the chat rooms and enter into a conversation with them. So be ready to hear unfiltered comments from anybody in the chat room.

One of the great things about Clubhouse is that unlike other social media apps like Twitter, Facebook, Instagram, where you have to stare at a screen to participate, you can actually be in a chat room listening and doing other things.

Now unfortunately, you cannot record or save the conversations. The audio doesn’t leave the app.

At the start of December 2020, Clubhouse had just 3,500 members around the world, now it has over 600,000.

So what is so interesting about Clubhouse that they are fighting to invest in it?

I believe investors see Clubhouse as the way of creative interaction and the fact that it will spread like wildfire. They see it as a platform for real-time, dynamic exchange of ideas and better than just consuming static content.

Clubhouse can also be seen as a platform where influential users can create their own communities easily. You can have celebrity talk shows, D.J. nights, networking events, speed dating, theatrical performances, product pitches, political discussions and fund raising activities. Social media influencer, real estate investor and Discovery Channel’s Undercover Billionaire, Grant Cardone, announced that he just got commitments for $8.5 million for his real estate fund, Cardone Equity Fund 11, using Clubhouse

Interestingly, nobody is talking about monetization yet but I suspect that will come pretty soon. Though most of the chatrooms are free right now, you may end up paying for a chat room as a creator, your fans paying to enter into a chat room.