Substock, a Bollywood newsletter platform that lured leading writers with a promise to cash in on their relationship with readers, has given up its efforts to raise money after the venture capital market cooled in recent months, according to people familiar with the decision.
Substake has been discussing raising વ્યવ 75 million to $ 100 million to grow its business with potential investors in recent months, with people saying they would only speak anonymously because the conversation was private. They said some fundraising discussions put the value of the company at between $ 750 million and $ 1 billion.
The decision is another sign of a shift in recent go-go years of free-flowing cash for young start-ups, especially consumer-facing ones like Substack, which have raised at least $ 86 million in three rounds of funding, according to Pitchbook. Tracks.
Now, investors are preaching austerity and blocking new deals, especially for companies that spend aggressively on growth without signs of profit. Although the substake is still recruiting, other companies are facing layoffs or lower valuations, some of which Comparison The recession in the years following the 2008 financial crisis or the 2000 dot-com bubble.
Lulu Cheng Mesarve, a spokesman for Substack, declined to comment on the company’s financial or any funding talks. She said the company remained in growth mode, pointing to a web page with more than a dozen job listings, including the head of growth.
“My comment is www.substack.com/jobs,” she said.
The investment terms under discussion for the substock would represent a leap in the company’s valuation, which was said to reach $ 650 million last year after the company closed a રા 65 million funding round from investors, including Andreessen Horowitz.
Substake has told investors it had about $ 9 million in revenue in 2021, according to people familiar with the fundraising negotiations. Such a high valuation was more common for a relatively low-income company in the last month of 2021, when the stock market was booming and venture firms were more bullish on start-ups.
The company has introduced itself as an alternative to established publishers of news articles, graphic novels and books. Substack says it gives writers a better share of the revenue from their work. The company deducts 10 percent of the total revenue paid to subscribers to their newsletters. Stripe, Substack’s payment processor, takes another 3 percent.
The company has won over influential writers, including journalists Matthew Iglesias and Glenn Greenwald, and American history professor Heather Cox Richardson. Company executives say more than 1 million people pay to subscribe to newsletters on its platform, and users pay more than $ 20 million annually to subscribe to the 10 most popular authors of Substock.
But some writers who initially won by substack pitch, eventually decided to leave the platform, choosing to give the company directly to their audience in court without paying its cut. Others were annoyed by the company’s approach to handling content on the platform. Last month, The New York Times reported that some newsletter writers were exploring alternatives such as Ghost, a platform that provides services such as Substacks. Ghost’s open-source publishing platform does not moderate content, but its paid hosting service has some restrictions for content that calls for violence or otherwise violates the law.
Substack is also facing stiff competition from big tech companies, with many media companies it wants to compete with. Twitter, LinkedIn, The Atlantic and Puck – start-ups founded by John Kelly, former editor of Vanity Fair – are all using email newsletters as a channel to engage their audience and make money.
Substack is one of a group of start-ups that began to grow into an epidemic, and investors began to fight to pour money into them over a confused appraisal. But some so-called epidemic winners, such as audio app clubhouse and grocery delivery service InstaCart, have seen their explosive growth slow as people return to their routines.
Extensive economic forces, including high interest rates, rising inflation and declining stock markets, added to the darkness.
Erin Griffith Contribution Report.