Substack, the five-year-old newsletter platform that has aggressively positioned itself as a disruptive force in media, has abandoned efforts to raise a Series C round, the New York Times is reporting today. According to its sources, Substack held discussions with potential investors in recent months about raising $75 million to $100 million at a valuation of between $750 million and $1 billion.
Substack, based in San Francisco, was valued at $650 million by its investors, after closing a $65 million Series B round last year led by earlier investor Andreessen Horowitz.
The Times notes that Substack is one of many outfits right now facing new headwinds, as investors snap shut their checkbooks amid rising interest rates that have severely dented stock stocks and and slowed growth in the U.S. and global economies.
We’ve reached out to Substack for comment. In the meantime, a spokesperson for the company told the New York Times not to make too much of the company’s change in fundraising plans, telling the outlet, ““My comment is www.substack.com/jobs.”
If Substack’s overall fortunes should change, it would be the second, highly hyped consumer company in Andreessen Horowitz’s portfolio to have dominated the headlines, then lost momentum.
Clubhouse, the audio-based social network that was the talk of the tech world toward the end of 2020 and, like Substack, gathered up numerous rounds of funding led by a16z, has seemingly become an afterthought over the last six to 12 months, as the worst of Covid passes and people who were drawn to the service during the height of the pandemic resume their socializing and networking in person.
Andrew Chen, a general partner at the firm, led both deals.
Substack has raised $86 million over three rounds of funding, according to PitchBook. In addition to a16z, it is backed by Fifty Years, Y Combinator, and entrepreneur Audrey Gelman, who cofounded The Wing, per Crunchbase data.
According to the Times report, Substack has told investors that it had revenue of about $9 million last year.