Substack, the much-hyped newsletter platform, has dropped plans for a Series C – TechCrunch


Substack, the five-year-old newsletter platform that has aggressively positioned itself as a disruptive force in media, has dropped its efforts to raise a Series C round, The New York Times reports today. According to its sources, Substack has been in discussions with potential investors over the past few months about raising $75-100 million at a valuation between $750-$1 billion.

San Francisco-based Substack was recently valued at $650m by its investors after closing a $65m Series B round in March last year led by former investor Andreessen Horowitz (a16z) . He previously raised a $15.3 million Series A round led by a16z in 2019.

Substack was originally launched as a way to turn newsletters into a paid subscription business, inviting anyone interested to jump on the platform and start writing for whatever amount they want to charge their readers. . Writers were – and still are – encouraged to write for free; those who charge for a subscription pay 10% of what they collect to Substack, with Stripe, its payment processor, collecting an additional 3%.

The company then added support for podcasts and just this month it rolled out its own podcast player, along with new moderation tools, rating categories and more. As CEO Chris Best told TechCrunch several years ago, Substack’s goal has always been to empower its users to create their own “personal media empire.”

Whether the company is able to generate meaningful revenue despite these bells and whistles is the question investors might have asked. Substack told investors it made about $9 million in revenue last year. The company separately told Axios late last year that the platform’s top 10 writers collectively generate $20 million in annual revenue.

The Times notes that Substack is one of many companies currently facing new headwinds as investors abruptly close their checkbooks amid rising interest rates that have severely hurt stocks and slowed the growth of economies. American and global.

If Substack’s overall fortunes were to change, it would be the second high-profile consumer company in Andreessen Horowitz’s portfolio to have largely captured the public imagination and then to lose momentum.

Clubhouse, the audio-based social network, has, like Substack, garnered most of its funding through numerous rounds led by a16z. While Substack has become a point of fascination for media companies – the Times has published numerous stories about the outfit, as has Vanity Fair and the New Yorker – Clubhouse has also been in the headlines for several months during the pandemic thanks in part to appearances on the platform by Elon Musk and Mark Zuckerberg. Yet as the worst of Covid has seemingly passed and those once drawn to the service are beginning to socialize in person again, Clubhouse has reportedly seen enrollment plummet.

Andrew Chen, a general partner specializing in consumer technology for a16z, led both transactions.

Substack has raised $86 million across three funding rounds, according to PitchBook. In addition to a16z, he’s backed by Fifty Years, Y Combinator and entrepreneur Audrey Gelman, who co-founded The Wing, according to Crunchbase data.

Earlier today, we reached out to Substack for comment. In the meantime, a company spokesperson told The New York Times that the change in the company’s fundraising strategy did not affect hiring plans. “My comment is www.substack.com/jobs,” she told the outlet.

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