Substack and the community round

As a small newsletter, it is always exciting to receive an email from Substack. Generally, the email is to inform me that I have a new (free) subscriber. Not so yesterday.

The newsletter platform announced it is offering its writers the chance to invest in the company through a community fundraising round.

Writers/investors can make an investment of at least $100, with Substack's funding goal set at $2 million and a pre-money valuation of $585 million. The offer is already oversubscribed with more than $6.2 million of commitments.

Substack says it is serious about building the platform with writers and sees the community round as a way to further this ideal while allowing users to participate in the financial upside.

A more cynical view might be that, given the fall in tech valuations and the tightening of VC funding, a community round represents an opportunity to cling to a frothy valuation at the expense of unsophisticated investors who might be better at writing than maths.