3 takeaways from Substack’s recently released financial results

I got excitedvery excited – when I found out that Substack’s crowdfunding effort would result in the release of financial results.

Unfortunately, due to fundraising rules and timing, Substack is not required to detail its finances for 2022, and therefore the start released hard data for 2020 and 2021 as well as some user-specific metrics for the past year. This gives an interesting, if incomplete, picture of the health of the company.

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I expected to spend some time this morning weighing in on the morality of Substack’s choice not to share its 2022 audited results, but Dan Primack nailed that argument this morning in Pro Rata. Since I can’t improve on what he said, we can leave that to Axios and focus our fire on data analysis.

So to kill time while we heal our hangover post-Y Combinator demo daylet’s review Substack’s growth model (including its most recent non-financial data), reflect on the company’s current financial health, and then compare its upcoming capital raise to its potential cash requirements.

It’ll be fun. Think of it as a quick look at a partial S-1 filing, but for a Series B company. Sound good? To work!

Lots of data, but not enough

You can read all the financial results published by Substack here in case you want to play the game.

To begin with, note that the company raised a lot of money until 2021 invest in its platform and expand its user base. So, as we look at its results through 2021, it would be wise to remember that the company was focused on growth back then. How did it work?

Substack’s growth model is expensive, if effective

Substack’s gross revenue grew over 400% to $11.9 million in 2021 from $2.4 million in 2020. This is precisely the type of top-tier expansion that investors venture capitalists want to see a startup through its investment cycle. The company announced its Massive Series B of $65 million in early 2021meaning that it had access to this cash during the year.

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