Sources: Substack dropped efforts to raise money, after talks to raise $75M-$100M at a $750M-$1B valuation, during which the company said 2021 revenue was ~$9M
Good afternoon! Today, Realm's no-code beta enters it's … Michael Spencer / Creator Economy Tips : Substack Halts Plans for Series C Funding Casey Newton / Platformer : Substack's failed fundraise Tweets: Ben Mullin / @benmullin : Scoop: Substack was exploring raising a new funding round in recent months, but dropped those efforts when the market flipped https://www.nytimes.com/... Joy Larkin / @joy : Uh huh, so before the market correction, one could raise for a $1B valuation with less than $10M in revenue. https://twitter.com/... Adam Lashinsky / @adamlashinsky : The news is not the true headline here. That Substack had $9M in revenue last year, in what very likely will be its best year ever, is. Oh, but, someone, presumably with a straight face but little real-world financial experience, thought it was worth $1B. https://www.nytimes.com/... Benedict Evans / @benedictevans : Lots of very round numbers in this, but if Substack has 1m paying subs and $9m net revenue, gross subs revenue is $90m and ARPU is $90/year. At face value that implies very few people take more than one sub. Not much discovery yet then? https://www.nytimes.com/... Jack Marshall / @jackmarshall : When you boil it down Substack is a rudimentary CMS and an ESP with hardly any features. Kinda bizarre how much airtime it gets. https://www.nytimes.com/... Sameer Singh / @sameer_singh17 : From one of my essays: “...growth loops for purely viral products are not linked to product value. This can make it harder to defend and sustain organic growth over time... a flywheel powered by network effects is not only self-sustaining, it actually gets stronger over time.” https://twitter.com/... @pt : I miss the heady GMV-multiple days of a couple months ago already. 2021, we hardly knew ye. https://twitter.com/... @longshorttrader : Trading at 100x revenue ? Private company valuations don't matter, I'm told, but this seems due for a “re-rating” 👇 https://twitter.com/... Joshua Schoenaker / @joshschoen : raising at 100x revenue... (yes, don't know growth rate etc.) https://twitter.com/... @fmanjoo : 9 million! One thing: would this be just their cut of the subscriptions, or the whole thing? https://twitter.com/... @carnage4life : Not sure which is more bonkers - that Substack was trying to raise money at 100x revenue or that said revenue was only $9M in 2021. It's amazing how little money the most hyped startups of the last few years were making. https://www.nytimes.com/... @barbariancap : Surprised that the 2021 revenue is so low. https://twitter.com/... Elina Lappalainen / @elinalappalaine : “Now, investors are preaching austerity and halting new deals, particularly for companies that spent aggressively on growth with no signs of profits” https://twitter.com/... Christina Warren / @film_girl : I'm telling you. The opportunity for a WordPress-esque Substack compete (that the latest @Ghost 5.0 is closer and closer to) is massive. https://www.nytimes.com/... @caleweissman : yes valuations can be bloated but a $1B valuation on $9M of revenue is actually insane https://www.nytimes.com/... https://twitter.com/... @riddle245 : Wait wanted a 1B valuation on 9M in revenue. It's not 2020 anymore for 111x sales haha https://twitter.com/... @suldrew : guess they should post some more blogs about it and get some subscribers. Monetize it, baby https://twitter.com/... Gabe Rivera / @gaberivera : I peeked at this article and they don't mean “drops” as in “Kendrick Lamar Drops New Album” but rather some archaic sense of “to drop” probably used in the prior millennium. https://www.nytimes.com/... Tyson Brody / @tysonbrody : Substack was pitching a $1 billion valuation on revenues of $9 million? how big of a market were they imagining for subscription politics blogs and tip sheets? https://twitter.com/... Kyle Chayka / @chaykak : If Substack was trying to raise at a $1 bil valuation on $9 mil revenue in 2021... https://twitter.com/... Thomas Maxwell / @tomaxwell : Substack had a valuation of $650 million last year on $9 million in revenue; fundraising it recently paused would have valued it at $1 billion https://www.nytimes.com/... https://twitter.com/... Kate Clark / @kateclarktweets : Substack—and hundreds of other startups: https://www.nytimes.com/... Peter Kafka / @pkafka : Meanwhile publishers who were freaked out about substack a year ago are much less so. https://twitter.com/... See also Mediagazer
Context & Ripple Effects
Substack spent 2020 and 2021 insisting it was a platform, not a media company (founders' platform-not-media framing), while making editorial bets like directly paying certain writers to shape what kind of writing thrives there. Both moves assumed cheap capital to fund growth ahead of revenue.
That assumption broke: sources tell the New York Times the company walked away from talks to raise $75M-$100M at a $750M-$1B valuation once it disclosed only ~$9M in 2021 revenue. The arc eventually bends back — by mid-2025 Substack was pitching investors on $50M-$100M at above its prior ~$700M valuation, but on roughly $45M of ARR rather than promises.
First-order effects
- Substack stays on its existing balance sheet instead of adding $75M-$100M, capping how aggressively it can pay writers upfront or subsidize growth while competitors like Forbes' salary-plus-revenue-split newsletter service court the same journalists.
Second-order effects
- Rivals competing for marquee writers gain leverage: Substack's advance-check strategy was funded by venture expectations of a $1B markup, and without a round those checks get harder to justify against ~$9M of annual revenue.
Third-order effects
- Creator-economy platforms get repriced on actual subscription revenue rather than audience narrative — the gap between a $750M-$1B ask and single-digit-millions of revenue becomes the cautionary template investors apply to the next newsletter or creator platform raising money.
The trend: Creator-economy funding is shifting from valuation-led rounds justified by audience growth to revenue-disciplined raises, forcing platforms like Substack to grow into their numbers before returning to market.