The writing and newsletter platform, Substack, has grown in popularity since being founded in 2017. But while it has been gaining attention, it has avoided traditional venture capital investment. This is significant, as venture investments are the go-to resource for many tech startups looking to scale up. Can Substack, however, sustain its growth and success without the influx of capital provided by venture capitalists?
The answer may be yes. The key to Substack’s success has been, in large part, its focus on content creators, also known as “content entrepreneurs”. The platform provides an alternative to selling ad space or venturing into traditional publishing with its generous payouts of 80-85% of reader subscribers’ funds. This allows content creators to earn money directly from their work, enabling them to grow their business independently, with no need for venture capital funds.
Another stream of revenue earners on Substack are the Superwriters. These are people who have made a name for themselves among readers and receive a premium subscription fee. This allows people to continue doing what they love – writing – without having to chase after venture dollars.
It’s also important to note that venture capitalists generally want to be involved in the operations and management of the companies they back. That, however, is not something Substack prides itself on, as the platform encourages and allows content creators to build their own businesses as they see fit.
Additionally, Substack has grown because of its mission-driven approach, with an emphasis on connecting independent writers with their audiences, allowing for more intimate and direct relationships. This would likely be compromised if venture capital funds were poured into the platform.
Finally, Substack’s monetization relies on existing capital of its subscribers, not venture capitalists. This means that the company’s growth is not dependent on the investment of external funds, which is a financial benefit.
All of this leads to the conclusion that Substack can very well continue to grow and succeed without venture capital investments. Its focus on content creators, existing capital of subscribers, and mission-driven approach make it a viable business model that could see plenty of success without the traditional sources of venture capital.
