Substack Inc., the online host of writers like Kareem Abdul-Jabbar and Matt Taibbi, is inviting contributors to become investors as the newsletter publisher looks to continue its growth in a tough market for fundraising.
(Bloomberg) — Substack Inc., the online host of writers like Kareem Abdul-Jabbar and Matt Taibbi, is inviting contributors to become investors as the newsletter publisher looks to continue its growth in a tough market for fundraising.
The San Francisco-based company is letting its authors put in as little as $100 for shares. Co-founders Chris Best, Hamish McKenzie, and Jairaj Sethi said in a blog post Tuesday that recent regulatory changes allow businesses to tap more money from less-wealthy investors, a move they see as advantageous to the company.
“We’re doing this because the dynamics of a platform like Substack change if the people who are building their businesses on it are owners of it, too,” they said.
Wefunder.com, the site Substack is using to collect the investments, has made such “community rounds” easier, they added. On Wefunder, they warned investors that the company is a startup “on an extremely ambitious mission” and writers shouldn’t participate unless they could afford to lose their entire investment.
Substack, founded in 2017, is an online forum where novelists such as George Saunders and journalists like Bari Weiss can establish a direct connection with readers, who can pay to subscribe to their newsletters. The company distributes about 86% of the revenue to the writers.
Readers have paid the authors more than $300 million cumulatively through the platform. More than 17,000 writers are making money, with the top 10 Substack publishers combined generating more than $25 million a year. The company has more than 35 million monthly active users, with about 2 million of them paid.
Substack has raised $82 million, including two rounds led by venture capital firm Andreessen Horowitz, the company said on its Wefunder page.
Last year, Substack abandoned an effort to raise as much as $100 million from potential investors, the New York Times reported. It also laid off about 14% of its staff.
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