Strategic Insight: Substack - The $1bn creative/social space

Overview of the $100 M Series C Funding (July 2025)

Substack – the newsletter-publishing platform turned broader creator network – has raised $100 million in a Series C round, valuing the company at about $1.1 billion post-money techcrunch.comreuters.com.

The round (announced mid-July 2025) was led by BOND and The Chernin Group (TCG), with participation from existing backer Andreessen Horowitz (a16z) and notable individual investors Rich Paul (Klutch Sports CEO) and Jens Grede (Skims co-founder) techcrunch.comreuters.com.

This funding elevates Substack to “unicorn” status, roughly 70% above its last valuation (~$650 M in 2021) techcrunch.com. In total, Substack has now raised about $200 million since its 2017 founding reuters.comreuters.com.

Use of Proceeds and Strategic Focus:

According to Substack’s founders, the new capital will be invested in “better tools, broader reach, and deeper support for writers and creators,” as well as doubling down on the Substack app to expand the network’s social features techcrunch.comreuters.com.

In a blog post announcing the raise, CEO Chris Best and his cofounders emphasized building out Substack’s reader app as a dedicated space where “audiences reclaim their attention and connect with creators they care about” – positioning the app as a reader-focused social network for newsletters reuters.com.

They noted the platform now hosts millions of active users interacting with writers (beyond just email delivery). The fresh funding will support improvements such as enhanced discovery, recommendation features, and infrastructure to help writers grow their subscriber base through the app.

Notably, Substack’s business model is evolving. The founders signaled a shift toward advertising and bundled offerings – a move away from the company’s original purist subscription approach.

In fact, reporters noted that Substack’s founders are now open to experimenting with an ad-supported product and subscription “bundles” (packaged deals for multiple publications) to enhance monetizationmediagazer.com.

This marks a strategic broadening of Substack’s pitch: beyond taking a 10% fee on newsletters, they aim to capture more of creators’ audience through a hybrid of “subscription network” features and selective use of ads (potentially in the app or free newsletters) mediagazer.com.

The overall narrative to investors is that Substack is building a new media ecosystem – one that combines the direct payment model of newsletters with the network effects of a social platform, but without the algorithmic, ad-driven pitfalls of traditional social media techcrunch.com. In the company’s own words, they are creating an “economic engine for culture” powered by direct relationships:

“Ownership for creators. Agency for audiences”.

Traction:

By early 2025, Substack’s growth is strong, underpinning its pitch. The platform reported surpassing 5 million paid subscriptions as of March 2025 techcrunch.com – up from ~2 million paid subs in 2023 techcrunch.com and about 4 million in late 2024 reuters.com. (These figures count aggregate subscriptions across all Substack publications.)

Cumulatively, readers have paid over $300 million to writers via Substack as of early 2023 techcrunch.com, and that number is likely far higher now. This translates into substantial revenue for Substack (which keeps a 10% cut of paid subscriptions).

The company also boasts more than 35 million total active subscriptions (free + paid) on the platform as of 2023 techcrunch.com – highlighting a large engaged readership that can be nurtured through its network features. Such metrics, along with Substack’s high-profile writers and cultural influence, formed a key part of the investor pitch.

The inclusion of BOND (a growth fund led by Mary Meeker) and TCG (media-focused fund by Peter Chernin) underscores investor belief in Substack’s vision of a new media paradigm that blends journalism, community, and tech.

Insight:

This funding round, which follows a challenging 2022, also represents a vote of confidence in Substack’s long-term strategy. The company famously scrapped a planned raise in 2022 (aiming for $75–100 M at ~$1 B valuation) when market conditions turned, and instead cut costs to extend runway techcrunch.com.

By mid-2023, Substack had pivoted to a community round, involving its users (details below). Now in 2025, achieving the unicorn valuation with prominent investors suggests that Substack’s subscription-network model has gained traction, even though the company is likely not yet profitable and faces skepticism from some in media (e.g. “a $1 billion valuation for a media company that doesn’t make any money,” as one industry observer noted.

The founders’ willingness to explore new revenue streams (ads, bundles) and the platform’s strong subscription growth were critical in persuading investors that Substack can eventually monetize its network effect and justify its valuationmediagazer.com. In essence, Substack’s pitch marries ideals of creator empowerment and audience trust with the scale ambitions of a social platform – an attractive narrative amid a creator economy boom.

Funding Timeline and Investor Base

Substack’s fundraising history showcases a steady climb from seed funding through its new Series C, with a mix of venture firms and individual backers. Here is a timeline of Substack’s major funding rounds and investor milestones:

• 2018 – Pre-Seed and Seed: Substack graduated Y Combinator’s Winter 2018 batch and raised an initial $120,000 pre-seed from YC in January 2018 clay.com. A few months later, in April 2018, it closed a $2 million seed round (actually $2.2 M including the YC money) led by early-stage VC Fifty Years, with participation from The Chernin Group, ZhenFund, and prominent angels like Emmett Shear (Twitch co-founder) and Justin Waldron (Zynga co-founder) globalventuring.com.

  Motivation: These funds helped kickstart the platform’s development and begin recruiting notable writers. At this stage the company’s valuation wasn’t publicly disclosed, but was likely in the ~$10–15 M range.

• 2019 – Series A: Substack raised a $15.3 million Series A in July 2019 led by Andreessen Horowitz (a16z), which had Andrew Chen join Substack’s board. Y Combinator also joined this round, globalventuring.com.

  Motivation: With a growing roster of newsletter writers, Substack used the Series A to scale its platform and attract more creators, funding product improvements (analytics, payments) and programs like writer fellowships globalventuring.com. (Notably, the Chernin Group – already a seed investor – was mentioned as backing Substack by this time globalventuring.com, signaling TCG’s continued interest.)

• 2021 – Series B: During the newsletter boom, Substack secured a $65 million Series B in early 2021 (announced in April 2021). This round was led again by Andreessen Horowitz (GP Andrew Chen) and reportedly valued Substack around $650 million post-money techcrunch.com. The Series B included both a16z and possibly a few new investors (the round was not publicly dissected, but PitchBook data suggests no major new VC names beyond existing backers) techcrunch.com.

  Motivation: The cash infusion (in the midst of a broader creator-economy frenzy) was used to expand Substack’s offerings – including support for podcasts and video, hiring more staff, and courting high-profile writers with advances. By the end of 2021, Substack’s annualized revenue was still modest (~$9 M) but growing fast research.contrary.com, and the $650 M valuation implied investors were pricing in future growth (roughly a 70× revenue multiple at the time)research.contrary.com.

• Mid-2022 – Aborted Series C Effort & Layoffs: Substack’s plan to raise another ~$75–100 M in 2022 (targeting a $750 M–$1 B valuation) fell through due to the sharp downturn in tech and media funding techcrunch.com. By May 2022 the founders abandoned those fundraising talks as investors grew cautious, and in June 2022 Substack laid off 13 employees (~14% of staff) to conserve cash axios.com. This period was a humbling moment – the company opted to extend its runway (focusing on core product and growth) rather than accept a down-round. Despite the setback, no major investors exited at that time; instead, backers like a16z and TCG stayed on the cap table waiting for a market recovery.

• Early 2023 – Community Round (Crowdfunding): In March 2023, Substack took the unconventional step of opening a community funding round on Wefunder, inviting its writers and readers to invest small amounts. The initial target was $2 M, but demand was high – over $6.7 M was pledged within days techcrunch.com. Ultimately Substack raised about $7.8 M via this crowdfunding round (at a $585 M pre-money valuation, which was essentially the same valuation as the 2021 Series B)clay.comtechcrunch.com.

  Motivation: Beyond the cash influx, this move allowed loyal writers and users to become shareholders, reinforcing Substack’s community-centric ethos. The company positioned it as “building Substack with writers” – giving those who depend on the platform a stake in its upside techcrunch.com. (Notably, 17,000+ writers were earning money on Substack by 2023, and the top 10 publishers were collectively making $25 M/year techcrunch.com – figures cited to excite community investors about growth potential.) The community round also signaled to VCs that Substack had alternatives to traditional capital, effectively bridging the gap until market conditions improved.

• Late 2024 – Bridge Funding: In November 2024, Substack secured a smaller $10 M “venture” round from a handful of private investors clay.com. Details on this round were not widely publicized – no specific lead was announced – suggesting it may have been an internal bridge or strategic investment to provide additional runway. (One rumored participant was investor Omeed Malik of 1789 Capital, who focuses on media ventures clay.com, though Substack did not officially confirm new names.) This $10 M likely came in as a convertible note or SAFE, anticipating the next equity round. It helped Substack fund new features (like the Substack Notes and Chat features launched in 2023–24) and revenue initiatives while preparing for a proper Series C.

• Mid-2025 – Series C: The culmination is the $100 M Series C in July 2025, led by BOND and The Chernin Group with Andreessen Horowitz, Rich Paul, and Jens Grede participating techcrunch.comwtyefm.com. This round values Substack at $1.1 billion and brings a new prominent investor onto the board (BOND’s general partner Mood Rowghani will join Substack’s board) reuters.com.

  Motivation: The raise provides a significant war chest to accelerate Substack’s expansion as a full-fledged network platform – funding product development (analytics, discovery, mobile app improvements) and potentially marketing to broaden its user base. It also marks a triumphant return to fundraising on Substack’s own terms (at a higher valuation) after the 2022 pullback.

Over the course of these rounds, Substack’s investor profile evolved from mainly seed angels and accelerators to top-tier VCs and media-focused funds. Andreessen Horowitz (a16z) emerged as a key stakeholder by leading Series A and B, showing strong conviction in Substack’s vision techcrunch.com. The Chernin Group (TCG), which first backed Substack at seed, increased its bet by co-leading the latest round wtyefm.com – a sign of long-term belief. Other institutions like Y Combinator (whose Continuity fund likely followed on) and Fifty Years (the seed lead) have remained on the cap table, albeit with smaller percentages after dilution.

Substack also attracted high-profile individual investors, for example, entrepreneur Audrey Gelman invested (as noted by PitchBook) techcrunch.com, and the latest round’s celebrity angels (Rich Paul and Jens Grede) add to its star power.

So far, there have been no known major investor exits – early backers have largely held their stakes. In fact, some early stakeholders doubled down (e.g. TCG, which participated in seed and Series C) rather than cash out. This suggests that insiders see significant upside ahead, provided Substack can execute on the growth and monetization of its network.

Current Ownership & Cap Table After the Series C

Following this Series C, Substack’s cap table comprises the three co-founders, several venture firms, smaller early investors, and even a community of writers/shareholders. While exact ownership percentages are not public, we can outline the major stakeholders and their approximate stakes:

• Founders & Team: Chris Best (CEO), Hamish McKenzie, and Jairaj Sethi – Substack’s co-founders – together retain a significant equity stake. They originally owned the vast majority of the company (as is typical), and even after multiple rounds of dilution, the founders are believed to hold a substantial minority share (on the order of ~30–40% combined). This includes shares earmarked for employees/options. The founders have not sold any known shares to outside investors to date, and their sizable stake aligns with the company’s long-term vision.

• Andreessen Horowitz (a16z): The largest venture shareholder is a16z, which led Substack’s Series A and B and participated in Series C. globalventuring.comtechcrunch.com
  Andreessen Horowitz likely accumulated a significant stake across these rounds – analysts estimated a16z held on the order of ~15–20% after the Series B. A16z did join the Series C (pro-rata) techcrunch.com, so it has maintained a strong position (possibly in the high-teens percent of ownership). Andrew Chen of a16z remains on Substack’s board, reflecting this large and long-term investment.

• BOND Capital: New lead investor in Series C, BOND (Mary Meeker’s growth fund) now owns a significant stake in Substack. If we assume the $100 M Series C represented roughly ~9% of equity (since $100 M out of ~$1.1 B post-money)reuters.com, and BOND contributed a significant portion of that round, BOND’s stake is likely on the order of ~5% (could be a bit more or less depending on how the round was split). BOND’s Mood Rowghani joining the board indicates this is a strategic, sizable investment reuters.com.

• The Chernin Group (TCG): Peter Chernin’s fund has been involved since 2018 and co-led the new round. TCG’s stake includes a small position from the seed round (diluted over time) plus a larger addition in Series C. After the latest investment, TCG’s total holdings might be in the low-to-mid single-digit percentage range (similar to BOND’s ballpark). TCG’s renewed investment shows it’s doubling down on Substack’s potential in the media landscape wtyefm.com.

• Y Combinator: YC invested at pre-seed (taking ~7% in 2018) and joined the Series A globalventuring.com. After all dilution, YC’s stake is relatively small now – likely only a few percent or less. However, it remains a symbolic stakeholder and part of Substack’s origin story.

• Fifty Years & Other Seed Investors:

  Fifty Years (the seed lead VC) and others from the $2 M seed (ZhenFund, Venture Souq, and angels like Emmett Shear, Justin Waldron, Naval Ravikant, etc.) still hold shares, but subsequent rounds have heavily diluted each. These early investors might each now hold <<5% (fractions of a percent in some cases). For example, Fifty Years led the $2 M round at perhaps ~$10 M pre-money; even without selling, that stake might be well under ~2% post-Series C. They remain on the cap table and will see upside if Substack succeeds (indeed, Fifty Years partner Seth Bannon has publicly reaffirmed his conviction in Substack’s mission), but they are no longer major decision-makers.

• Community Investors (Writers/Readers):

  The 7,000+ smaller investors from the 2023 community round collectively own on the order of 1–2% of Substack. The community round was at a $585 M valuation techcrunch.com; $7.8 M raised corresponds to roughly 1.3% of the company at that time. Those shares were diluted by the 2024 and 2025 rounds, but community investors still likely hold around ~1% or a bit less of Substack post-Series C. This group includes many Substack writers and loyal readers, reflecting Substack’s unique approach to sharing ownership with its user base.

• New Angel Investors (2025):

  Rich Paul and Jens Grede, who joined in the Series C, have relatively small stakes (well under 1%) – but their involvement is notable. Rich Paul (a sports agent) and Jens Grede (consumer brand founder) bring celebrity and strategic connections. Their investments are seen as votes of confidence in Substack’s brand and expansion into new creator verticals (sports media, lifestyle/fashion content, etc.) rather than large ownership positions reuters.com.

• Other Notable Holders:

  Substack’s cap table may also include minor stakes held by advisors or other funds. (For instance, the Contrary Research report lists GV (Google Ventures) and Greylock as notable investors research.contrary.com, though these firms were not announced in major rounds – if they are involved at all, it could be via secondary share purchases or small allocations). As of now, no single investor or entity owns a controlling share; the power is distributed between the founders and several VC firms.

In summary, Substack’s ownership after the $100 M Series C is divided roughly as follows (estimates):

• Founders & team (largest block, likely 30%+ combined);

• Andreessen Horowitz (~15–20%);

• BOND and The Chernin Group (each perhaps on the order of 5% give or take)reuters.com;

• and the remainder spread among Y Combinator, Fifty Years, other seed/angel backers, the 2023 community investors, and various individuals, each holding only a few percent or less.

The current valuation is $1.1 billion (post-money as of July 2025). Importantly, no major early investor has fully exited; instead, they are holding their equity in anticipation of future growth or an eventual liquidity event (e.g. an IPO down the line).

Key Insights and Outlook

Substack’s latest fundraise underscores both the promise and challenges of its model. On the one hand, the enthusiasm of top-tier investors (a16z, BOND, TCG) and the achievement of over 5 million paid subscriptions validate the idea that writers can build significant businesses on Substack (techcrunch.com). The platform has tapped into a cultural shift toward independent, subscription-based media, positioning itself as the leading infrastructure for that trend. reuters.com.

The influx of $100 M gives Substack the resources to innovate product-wise – for example, improving its recommendation engine, diversifying content formats (newsletters, podcasts, video), and perhaps introducing a tasteful advertising system that aligns with creator interests. These moves could increase revenue per user and attract segments (like brands or more casual readers) previously outside Substack’s core base.

However, investors will be watching to see how Substack navigates this new territory. The decision to consider advertising and bundles is a double-edged sword: it opens revenue streams but must be handled carefully to avoid alienating writers who joined Substack for its no-ads, no-algorithm philosophy. Substack’s leadership seems aware of this, hinting that any ad rollout would be opt-in and creator-centricmediagazer.commediagazer.com.

Another challenge is the competitive and regulatory landscape – Substack faces competition from alternative platforms (Ghost, Patreon, Beehiiv, etc.) and even from social media companies eyeing the newsletter space. Its $1.1 B valuation will demand strong execution: the company will need to substantially grow its subscriber base and revenue to justify that number. For context, at 5 million paid subscriptions (and Substack taking ~10% of subscription fees), Substack’s annual revenue run-rate could be in the tens of millions of dollars – a fraction of its valuation, implying a bet on high future growth.

The cap table composition reveals an alignment of interests toward long-term growth. Founders and core VCs still hold the majority of stock, meaning they are likely focused on an eventual large-scale success (possibly an IPO) rather than a quick sale. The presence of media-savvy investors like TCG and individuals from sports and fashion suggests Substack may expand into new content verticals and partnerships.

Meanwhile, the community shareholders (writers) on the cap table serve as a constant reminder to focus on creator success – effectively, Substack’s users are also its owners. This dynamic could push Substack to develop features and policies that favor sustainable creator income and independence (which, in turn, supports Substack’s own business).

Conclusion

• Substack’s $100 M Series C round provided a detailed look at the company’s business pitch and ownership structure.

• The pitch centers on transforming publishing by building a subscription-based social network – “a platform in service of culture,” as the founders describe it.

• The funding timeline and cap table show a company that has carefully balanced visionary backers, community involvement, and founder control.

• With $1.1 B valuation and a refreshed bankroll, Substack now faces the task of living up to the hype – turning its growing subscriber base and network effects into a profitable, enduring enterprise.

The next few years will be crucial to see if Substack can, in the words of one analyst, “live up to its new valuation” by truly reinventing the media ecosystemmediagazer.com.

Sources: Substack funding announcements and media