Substack ‘Community Round’ Outperforms Its Funding Goal

Substack, the web-based publishing and discovery platform, has opened an investment round to its writers and potentially other retail investors. Founded in 2017, the company has already raised more than $85 million, most recently from venture firm Andreessen Horowitz and entrepreneur Audrey Gelman. But last year, in a rough economic climate, it reportedly came up dry and is now asking the many writers who rely on it to put skin in the game. Based on early response, Wednesday’s announced goal of $2 million was upped to $5 million the next day.

The move is not without controversy. A writer for The Verge says she is skeptical of the concept of “financial inclusion,” possibly “because Facebook tried to launch a stablecoin for the ‘unbanked,’” a plan that was scrapped.

Cynicism aside, the scribes seem to be rising to the occasion. “At the time of this writing, it had already gathered about $2.4 million,” Quartz reported Thursday. The San Francisco-based company is using to field the ”community round,” with investments starting at $100.

Bloomberg describes Substack as “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 says it returns roughly 86 percent of revenue to its writers.

“Readers have paid the authors more than $300 million cumulatively through the platform,” Bloomberg reports, noting that “more than 17,000 writers are making money, with the top 10 Substack publishers combined generating more than $25 million a year.”

“We have been called a media company, a newsletter platform, and a social network, but none of those really fit,” co-founders Jairaj Sethi, Chris Best and Hamish McKenzie wrote in a joint post that is part sales pitch, part explication. “Substack is a subscription network,” a format the founders say represents “a step forward from social networks.”

In recent decades, the Internet has “created a media system in which writing has been economically devalued and advertisers have been served above all others,” the trio writes, concluding such developments “led to an attention economy that coarsens public discourse, reduces trust, and strips readers of agency and writers of financial dignity.”

Former Axios writer Bill Bishop, the first publisher at Substack, led the round out of the gate with $25,000 invested,” according to Axios, which notes “Bishop previously invested $100,000.” Those who don’t write for Substack are also allowed to participate in the raise, “but Substack will prioritize investments from its own writers,” Axios reports.

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