Substack opens up a $2 million community fundraising round

From the article:

The company revealed that readers have paid writers more than $300 million through Substack, and that the platform now has more than 35 million active subscriptions, including two million paid subscriptions. Substack also revealed that more than 17,000 writers are earning money on Substack, with the top 10 publishers on Substack collectively making more than $25 million annually.

Substack gets 10% of that, so that would be $30 million in revenue to date. After expenses, I guess that's not enough to fund their expansion plans? So they're attempting to get writers to give some of their money back.

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The company’s Wefunder page indicates that unaccredited investors can legally invest a maximum of $2,200. Substack says if the round if oversubscribed, it may not be able to accept all investments and may reduce individual investments, in which case users will be refunded the difference. If the round is oversubscribed, the company will prioritize Substack writers who have turned on paid subscriptions and paying subscribers.

The launch of the new community fundraising round comes as it was revealed in May 2022 that Substack had abandoned efforts to raise a Series C round after holding discussions with potential investors about raising $75 million to $100 million at a valuation of between $750 million and $1 billion, as reported by The New York Times. The decision to drop its funding efforts occurred amid an industrywide downturn as the market for venture investments cooled. In June 2022, the company then cut 13 jobs, representing 14% of its workforce.

Substack has raised $86 million over three rounds of funding, according to PitchBook. In addition to a16z, it is backed by Fifty Years, Y Combinator and entrepreneur Audrey Gelman. Given Substack’s current trajectory, it’s possible that the company is focused on working for its customers (i.e. writers) instead of its investors and looking at becoming self-sustaining.