Substack, the five-year-old newsletter platform that has aggressively positioned itself as a disruptive force in media, has abandoned efforts to generate a Series C round, the New York Times reports today. According to its sources, Substack had discussions with potential investors in recent months about raising $75 million to $100 million at a valuation of between $750 million and $1 billion. San Francisco-based Substack was recently valued at $650 million by its investors after closing a $65 million Series B round in March last year led by previous investor Andreessen Horowitz (a16z). It had previously raised a $15.3 million Series A round led by a16z in 2019. Substack was originally launched as a way to turn newsletters into a paid subscription business, inviting anyone interested to jump on the platform and start writing for everything you want. charge your readers. Writers were and still are encouraged to write for free; those who charge a subscription pay 10% of what they raise to Substack. The company later added support for podcasts, and just this month it launched its own podcast player, along with new moderation tools, sorting categories, and more. As CEO Chris Best told TechCrunch several years ago, Substack’s goal has always been to allow its users to create their own “personal media empire.” Whether the business is capable of generating significant income despite these bells and whistles is the question investors may have been asking. According to the Times report, Substack told investors that it had revenue of around $9 million last year. The Times notes that Substack is one of many teams facing new headwinds right now, as investors closed their checkbooks amid rising interest rates that have hit stocks badly and slowed growth in companies. US and world economies. If Substack’s overall fortunes were to change, it would be the second highly publicized consumer company in Andreessen Horowitz’s portfolio to dominate the headlines and then lose momentum. Clubhouse, the audio-based social network that was the talk of the tech world in late 2020 and, like Substack, has raised most of its funding in numerous rounds led by a16z, has apparently become something of an occurrence late in the last six to 12 months, as the worst of Covid wears off and people who were drawn to the service during the height of the pandemic resume socializing in person. Clubhouse has also faced increased pressure from copycats, including Twitter Spaces. Andrew Chen, the firm’s general partner, led both deals. Substack has raised $86 million in three funding rounds, according to PitchBook. In addition to a16z, he is backed by Fifty Years, Y Combinator and entrepreneur Audrey Gelman, co-founder of The Wing, according to data from Crunchbase. We’ve reached out to Substack for comment. Meanwhile, a company spokesperson told the New York Times that the change in the company’s fundraising plans does not affect its hiring plans, telling the outlet: “My comment is www.substack.com/jobs ”.
