Substack Raises $100 Million, Betting on Subscriptions but Coming Around to Ads
Nearly eight years later, Substack is pouring much of its effort into building a social network and warming up to the advertising business.
To fuel those ambitions, Substack has raised $100 million in funding from investors, including the Chernin Group, which backs sports, media and fan-focused businesses; BOND, a technology investment firm; Klutch Sports Group, a sports agency; Andreessen Horowitz, the venture capital firm; and the fashion executive Jens Grede, a co-founder of the shapewear brand Skims. The funding round valued Substack at $1.1 billion, according to two people close to the deal.
Substack's business model is simple: Users subscribe to follow creators on the platform, and the company takes a 10 percent cut of the revenue when those creators charge for a newsletter subscription or access to a podcast. That approach initially made Substack a writer's haven, resulting in more than five million paid subscriptions and a stable of publishers, including the short story master George Saunders, the historian Heather Cox Richardson and an exodus of journalists from traditional newsrooms.
But the latest investors are betting on an emerging product that could amplify its business. Substack's app, introduced in 2022, allows users to chat with their favorite creators, watch live video conversations and write and share posts on their own feeds through Notes, a feature similar to X or Bluesky.
The Substack app now has millions of users that draw in new creators and subscribers, said Chris Best, the chief executive of Substack, and Hamish McKenzie, its co-founder. They also said in an interview that Substack was planning to get deeper into the advertising business, which it previously criticized.
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