Substack, which has raised over $80M since it was founded in 2017, is looking to raise more money, this time directly from writers using the Wefunder crowd funding campaign. As of this writing, the campaign had raised $4.2M of the $5M maximum allowed by the SEC; the investment terms say this raise is “an extension of their series B, with a pre-money valuation of $585M”. Some of Substack’s big names, likeTed Goia and Heather Havrilesky, are onboard.

From the Substack founders:

When we raised our last round of funding, in March 2021, we explored how we might make it possible for a large group of writers to invest alongside the traditional investors, but it ultimately proved too complex. Most importantly, it was difficult to include people who were not already accredited investors—a qualification determined largely by wealth. But the idea never left our minds.

We are serious about building Substack with writers, and this community round is one way to concretize that ideal. We’re doing this because the dynamics of a platform like Substack change if the people who are building their businesses on it are owners of it too. And we’re doing it because it not only provides something good for our company but also presents an opportunity for the people who use Substack to participate in the benefits that come from building this network—including the financial upside.

Substack was founded as something of an antithesis to social networks and has always pitched itself as not only a home for serious writers of all stripes but something of a return to the promise of the internet for readers as well. Remove the incentives that allowed the platforms to degrade the web and a more authentic culture could emerge, the thinking went.

Of course these ideals quickly met the reality of the human race and brought plenty of controversy to Substack’s doors: about advances, handling criticism, the media industry, spreading misinformation, and of course shitposters. Started as an alternative to the tech giants, Substack soon became yet another example of the VC-funded platforms and would go on to inspire its own alternatives like Ghost and Buttondown.

Even beyond these critiques, there’s something that just didn’t sit right with me about announcement. Maybe it’s all the talk of “democratization” in the Substack post or the way Wefunder promises to fix capitalism with … more capitalism. I’m automaticallhy deeply skeptical of anyone who uses the language of human liberation and progress in service of, well, things that are not that.

Maybe it’s just this weird moment we’re in, where rising interest rates have the effect of exposing Silicon Valley’s more absurd tendencies — is Substack really trying to give back to their community or are they suddenly finding scant few VCs answering their calls?

Elizabeth Lopatto shares my concern.

Substack is desperate, huh? That’s what I understand from their fundraising email, anyway. They’re now hitting up retail investors for millions of dollars after they failed to raise last year.

After certain recent historical events, I have become skeptical of the term “financial inclusion,” a set of buzzwords for making financial services more available to people who are not stratospherically rich. Maybe my cynicism is because Facebook tried to launch a stablecoin for the “unbanked” that you nonetheless needed (at least, according to the now-scrapped plan) a credit card to use. Maybe it is because Robinhood made a big fuss about how many brand-new retail investors it brought onto its gambling platform. Or maybe it’s the proliferation of buy now, pay later services from the likes of Klarna, Afterpay, and Affirm (and now Apple.)

Anyway, Facebook’s stablecoin play failed and was sold for parts. Robinhood’s share price has fallen by a third in the last year. Oh, and Gen Z’s credit card debt is growing fast and furious. So yeah, when someone talks about financial inclusion, I assume the game is afoot.

I have a few qualms with Lopatto’s critiques — for example, I think she’s mistaken the pre- and post-money valuations when she says Substack’s valuation is down — but certainly agree there sure is a lack of information about the company’s operations. For all of the information Substack provides about cumulative writer payout (that strikes me as a rather creative metric), there’s nothing about actual revenue or burn rate.

Or it may just be the timing is actually right. As Scott Nover notes at Quartz, a 2021 rules change by the SEC allowed for the increase in crowdfunding raises and $5M is, ultimately, not that much additional runway. Of course, a fraction of that $5M also doesn’t provide much potential upside, especially with their already massive valuation. It may be the smart money is to just keep posting.