What is TAM for paid newsletters?

- Advertisement -


News broke yesterday that Substack, a popular newsletter publishing tool, canceled Series C fundraising plans after its target price increase failed to materialize. The company’s revenue base, compared to its expected valuation, was too small to support the numbers the startup had in mind.

- Advertisement -

This is not a unique story. Many startups that have risen at high prices in the last year will find it difficult to raise capital at new, higher prices. Why in this case, has been discussed in technology circles for several months now. In short, the market conditions that led venture capital to flourish last year have slowed or turned for the better, leaving many startups on private market valuations that no longer match today’s investor appetites.


- Advertisement -

TechCrunch+ is running a Memorial Day sale. You you can save 50% on an annual subscription for a limited time.


Substack displays a combative tone in its media coverage of its fundraising exploits, telling The New York Times that broke the news of the Series C company’s attempt — that his commentary on the story was a job page. Sure, Substack still has capital and is hiring, but the fact that they wanted to raise more funds is also telling.

- Advertisement -

The Substack Series C saga is a good moment to brush up on just how much the market has changed. And what’s more, we can go back in time and check out our previous coverage of company finances, estimating what we counted when it last went up. Everyone is going to look a little silly, so let’s get started!

Evaluation Mechanics

Recall that the last substack raised $65 million Series B what Pitchbook described as a post-cash valuation of $675 million. Here’s the latest news from the Times about what the company wanted to raise in Series C:

In recent months, Substack has been in talks with potential investors to raise between $75 million and $100 million to fund the growth of its business, said the people, who spoke only anonymously as the talks were private. Some of the fundraising discussions have valued the company at between $750 and $1 billion, they said.

Notably, if Substack had raised $75M at the valuation after a $750M investment, it would have been effectively a flat round compared to its Series B. That this valuation seems out of reach today means that the only way Substack would be able to to raise a new round of equity financing will be with a reduction in valuation. Top-down rounds are not popular, so it’s no surprise that the company has put its fundraising plans on hold, at least for now.

Why did Substack struggle to raise eight to nine figure capital at a nine to ten figure valuation? As it posted seven-figure earnings last year, the Times reported, writing that “Substack has told investors it generated about $9 million in revenue in 2021.”

This nugget allows us to do some interesting math:


Credit: techcrunch.com /

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox