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Substack pauses fundraising efforts of potential 100x valuation

May 27, 2022
Illustration of a small newsletter next to a medium-sized newsletter, followed by a large newsletter

Illustration: Annelise Capossela/Axios

Substack stopped fundraising efforts for a round of $75 million to $100 million, the New York Times reported Thursday.

Why it matters: The round could have valued the newsletter publication platform between $750 million and $1 billion. But the abandoned plans come amid the market's cooling and layoffs among other tech firms.

Details: Substack last raised a $65 million series B, led by Andreessen Horowitz, that valued the company at around $650 million, Axios scooped last year.

  • NYT reported that Substack told investors its 2021 revenue was about $9 million. That means its potential valuation of $1 billion would have been 100x its revenue.
  • Substack touted in November that it has more than 1 million paid subscriptions and that its top 10 writers collectively generate $20 million in annual revenue. But only a fraction of that contributes to Substack's bottom line.
  • Substack spokesperson Lulu Cheng Meservey declined to comment on the funding talks when contacted by Axios on Thursday. "My comment is," she told NYT.

What they're saying: "Substack doubled its paying customers in 2021 using the cash it had on hand; it ought to see if it can do the same thing this year. I suspect a company that learns to live within its means will soon seem quite attractive to the same VCs who this year turned it away," Casey Newton wrote in his Substack, Platformer.

  • "When you boil it down Substack is a rudimentary CMS and an ESP with hardly any features. Kinda bizarre how much airtime it gets," Toolkits co-founder Jack Marshall tweeted.
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