Silicon Valley venture capital firms wanted to invest in Mastodon. But founder Eugen Rochko turned down the offer - for good reason.
Twitter alternative Mastodon has received – and rejected – more than five investment offers from Silicon Valley venture capital firms in recent months. Eugen Rochko, software developer and founder of Mastodon, wants to preserve the non-profit status of the fast-growing social media platform .
The venture capital firms each wanted to invest "hundreds of thousands of dollars" in the product due to the rapid growth of the platform , Rochko told the Financial Times newspaper . However, Mastodon's non-profit status is "untouchable" and, along with the choice of moderation styles on the servers, makes up part of its appeal.
"Mastodon isn't going to turn into everything you hate about Twitter," Rochko said. "The fact that it can be sold to a controversial billionaire, shut down, go bankrupt and so on - it's the difference in paradigms [between platforms]."
Rochko explained that his long-term goal is to replace Twitter and other commercial social networks. There is a long way to go until then, but Mastodon is bigger than ever.
Mastodon relies on donations
Since it was bought by billionaire Elon Musk, Twitter has struggled with scandals. Among other things, the Twitter accounts of journalists were blocked and the posting of links to other social media platforms such as Mastodon was prohibited.
This is a "strong reminder that centralized platforms can impose arbitrary and unfair restrictions on what you can and cannot say," Rochko said in a recent blog post . The open-source software enables anyone to run a social media platform entirely on their own infrastructure and under their own control, while connecting to a global decentralized social network.
Behind the development of Mastodon is a gGmbH (non-profit limited company). Ultimately, it is a GmbH that operates in such a way that it benefits the general public.
According to Rochko , the status protects against the withdrawal of amounts that are higher than the original investment by the shareholders. Employees should not receive extraordinarily high salaries either. In addition, donations are tax-free in Germany.
Rochko is the sole founder and shareholder of the gGmbH and, according to the 2021 annual report, paid himself a monthly salary of 2,400 euros per month. According to his own statements, Rochko has now increased his salary by 500 euros.
Given the structure and lack of investment from venture capital firms, Mastodon remains dependent on donations. According to the “Financial Times” report , the total revenue for 2021 was around 55,000 euros. Mastodon now earns around 32,000 euros a month from the Patreon donation platform alone , which is donated by over 9,000 people.