Substack raises $65m as newsletter market heats up

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As Big Tech tries to edge its way into the newsletter space, Substack has secured funding to bolster its platform.

Substack has confirmed that it raised $65m to invest in its platform for subscription newsletters.

The Series B round was led by Andrew Chen of Andreessen Horowitz. Axios first reported on the raise earlier this week, saying that the deal would value the company at around $650m.

In a blog post confirming the news, Substack said it would use this funding to support writers and reporters using its platform, to build more powerful publishing tools and to grow its team.

These supports include expanding its financing programme to help writers start media businesses on the platform; rolling out fellowships, grants and mentorship programmes for Substack writers; investing in initiatives to support local news; and building a legal support programme and healthcare initiatives for writers.

Early days of a new ecosystem

Substack was founded in San Francisco in 2017 as a way for writers and reporters to send and monetise digital newsletters. Many of its prominent users now are journalists who have created their own subscription newsletters as a full-time gig, such as The Verge’s former tech reporter Casey Newton.

In its blog post about the fundraising, Substack said that over the last three years, readers have paid writers “tens of millions of dollars” through the platform. Newton’s Platformer publication, for example, costs readers $10 a month for a subscription.

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“More than half a million people pay to subscribe to a publication on the platform,” Substack added. “The top 10 publishers are grossing more than $15m a year.”

However, this is also a growing market that Big Tech is trying to get in on.

Earlier this year, Twitter acquired Dutch start-up Revue, a newsletter creation platform akin to Substack for writers and creators. Its tech will likely become part of Twitter’s plans to help users make money from tweets with additional content.

Around the same time, it was reported that Facebook was also plotting a move into the newsletter space. The social media giant confirmed that news earlier this month, saying it would introduce a new platform to “empower independent writers” with a free, self-publishing tool, monetisation tools and integration into other parts of Facebook.

With competition growing in the newsletter race, Substack said that it now plans to “do a lot more and move a lot faster”.

“These are just the very early days of a new ecosystem, but we are encouraged by how it has been going so far and excited for the years ahead,” it concluded.