Substack raises $100M, becoming unicorn with $1.1B valuation
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Substack, the email newsletter platform, has raised $100 million in a Series C round, bringing its total valuation to more than $1.1 billion, a source confirmed to Axios.
Why it matters: Its lofty valuation speaks to investor enthusiasm around the creator economy.
- Substack hasn't recently disclosed its revenue, but it made just $12 million in gross revenue in 2021.
- The company was focused on profitability after the pandemic, but it's now more focused on growth and has seen a huge surge in creator interest in recent months.
- Investors in its latest round include venture firm Andreessen Horowitz, which led its Series B round, The Chernin Group, BOND, Klutch Sports Group founder and CEO Rich Paul, and Skims co-founder and CEO Jens Grede. BOND's Mood Rowghani will join Substack's board.
Catch up quick: The company, which launched in 2017, has raised a total of roughly $200 million to date, mostly from venture firms and wealthy investors.
- It has used that capital to expand its product from simply serving emails to becoming a full-stack business and creative platform for writers, journalists, podcasters, video creators and influencers.
How it works: Substack takes a 10% cut of all subscriptions sold by creators on its platform in return for an array of technical and tactical support tools, like advertising sales support, marketing tools, legal support and, in some cases, health care.
- That's a bigger cut compared to rivals like Ghost or Beehiiv, but Substack's scale — and thus marketing funnel — is bigger.
By the numbers: The company said earlier this year that it had surpassed 5 million paid subscriptions on the platform, up from 2 million in 2023.
- More than 50 creators are now making more than $1 million per year on the platform.
Zoom out: Substack has recently attracted a slew of high profile journalists and creators from traditional outlets, such as former CNN anchor Jim Acosta, former ABC journalist Terry Moran and former MSNBC host Joy-Ann Reid.
- That slate has further boosted its popularity among established journalists.
- Those stars have quickly built up large followings. Jim Acosta, for example, amassed more than 10,000 paid subscribers to his Substack just weeks after leaving CNN in January.
What to watch: In a blog post announcing the raise, Substack co-founders, Chris Best, Hamish McKenzie and Jairaj Sethi said they would use the new funds to "invest in better tools, broader reach, and deeper support for the writers and creators driving Substack's ecosystem."
