Telegram can borrow up to $ 1 billion
Over the past three days, the average daily increase in the number of new Telegram users was 8.3 million people - only 25 million
/NOVOSTIVL/ Telegram in the past week experienced a sharp influx of new users who flocked to the private messaging app after rival WhatsApp changed its privacy policies and Facebook and Twitter took a harder line on President Donald Trump and users promoting violence.
That growth comes with mounting costs. The Dubai-based startup, which has yet to generate revenue and has been mostly funded to date by co-founder Pavel Durov’s personal fortune, has discussed with banks and investors raising hundreds of millions of dollars in debt that would convert to shares in an eventual public offering, said two people familiar with Durov’s thinking. One of the people said the funding could top $1 billion but cautioned that plans could change.
Telegram has been looking for new funding for months but now has pressing reasons to reach a deal. Its cloud server bills are rising. Plus, it faces an April deadline to repay money to investors who backed its ambitious plan, which the Securities and Exchange Commission shut down last summer, to create a digital currency using blockchain technology. The securities agency allowed Telegram to keep 30% of the $1.7 billion it raised to fund the project. While it has repaid some of the money, some European backers are still owed their original investments plus 10% interest, according to investors. It couldn’t be learned how much remains to be repaid.
“Telegram is constantly approached by many parties with debt financing proposals,” said company spokesman Markus Ra. “We are currently evaluating these proposals, but no decision has been taken on which path to follow.”
He added that the company is “considering various options in line with its privacy-focused ethos, but will not commit to any obligations imposing any form of mandatory exit event.” That could mean a merger, sale or public listing.
It is common for companies with established revenue, such as Uber, to raise money through convertible notes, a type of hybrid debt financing that turns into equity, often during a subsequent round of financing or public listing. But startups that haven’t generated revenue typically raise money in exchange for issuing new shares rather than taking on debt that comes with repayment obligations.
Debt financing may be an attractive option because it could allow Durov to maintain control of Telegram for longer. He has so far resisted selling equity to outside investors, citing his desire to not be swayed by shareholders, along with a “lifetime guarantee” he made to users to never sell the seven-year-old company. He and his brother Nikolai are Telegram’s co-founders and sole owners.
A convertible debt deal tied to an eventual public offering, whose proceeds could further support Telegram’s expansion, could enable Durov to fund the company until that listing. The timing of a potential offering couldn’t be learned. But if it were to happen, Durov could create a dual-class share structure that would allow him to retain control. For instance, he could give himself supervoting shares and issue nonvoting or single voting shares to the public.
“He isn’t used to reporting to anyone,” said Anton Rozenberg, an early Telegram employee who left in 2017 after a bitter legal dispute with the company.