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Substack reportedly in financial trouble [1]
['Rob Beschizza']
Date: 2023-04-11
Heavily restricted on Twitter, its CEO publicly accusing Elon Musk of lying about it, and running out of money after failing to raise more capital, Substack is on the ropes.
It tried to raise last year, seeking $75 million to $100 million from investors. But it had revenue of only $9 million in 2021, and a sky-high valuation on relatively little revenue was not the vibe in 2022. The company gave up. On its Wefunder page, the company says that the pre-money valuation on Substack is now $585 million, a 10 percent decrease from 2021. And now Substack has turned to Wefunder and retail investors. Friends, I do not like it, not least because the VCs last year got a pitch with Substack's annual revenue, and I do not see that shit line-itemed anywhere on the Wefunder page. Where's the money, Lebowski? Substack makes its money by taking a 10 percent cut of the subscription fees its newsletter writers charge. (Its payment processor takes another 4 percent, according to Wefunder.) The company says it paid out more than $300 million to writers, cumulatively.
$300m paid out to writers–a great thing–on $9m in revenue. The squeeze has to come. The product and the pitch is excellent, and I hope it succeeds, all told–but the squeeze has to come.
If you blew up your mainstream employability to be a substack guy and you aren't already rich as a result, here you go.
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[1] Url:
https://boingboing.net/2023/04/11/substack-reportedly-in-financial-trouble.html
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