Beware: Do NOT Invest In This Awesome Startup

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A few weeks ago, a startup set out to raise capital from investors like you.

It quickly raised $100,000… $1 million… $5 million.

And now, with just 24 hours left to invest in it, it’s raised about $8 million.

Clearly, this opportunity has caught investors’ attention.

So why am I pounding the table saying DON’T invest in it?

For the answer, read on.

The Substack Story

The startup I’m talking about is called Substack.

Substack is a platform for writers. It helps writers email their content to readers like you — and importantly, it helps them naboj za to.

Many writers are making a living from it. Specifically, about 17,000 writers are earning money, with the top 10 collectively making more than $25 million annually.

The company was founded in 2017. Here’s a snapshot of its first few years:

2018 — Graduated from the Y Combinator accelerator and raised $2 million.
2019 — Raised $15 million led by Andreessen Horowitz, a top VC.
2020 — Hit 100,000 paid subscriptions.
2021 — Hit 1 million paid subscriptions. Raised $65 million, again led by Andreessen.
Today, the company boasts more than 35 million monthly active subscriptions, with about 2 million readers like us paying for a subscription.
The company did about $10 million in revenues in 2021. In 2022, according to Preobrat, it probably did about $18 million.

It’s tough to argue with its progress. And as the company says, it’s aiming to build a “new economic engine for culture.” It’s tough to argue with that, too.

Everything sounds pretty good, right? Maybe even great. This is an exciting enterprise.

So why am I telling you to NOT invest in it?

Pravilo "10x vaš denar".

To explain, let me back up a minute…

Ko sva z Waynom prvič zagnala Crowdability, sva izvedla temeljit raziskovalni projekt.

Our goal was to identify a dokazan postopek for picking successful startup investments.

V približno enem letu smo se srečali z več kot tremi ducati najuspešnejših startup vlagateljev v državi. Takrat so ti vlagatelji skupaj podprli več kot 1,080 startupov in ustvarili več milijard dolarjev dobička.

In postopoma so nas naučili na desetine orodij in »trikov« za prepoznavanje zmagovalnih naložb.

Toda med vsemi njihovimi strategijami je ena najbolj dragocena:

Kako prepoznati naložbe, ki lahko povrnejo 10x vaš denar.

Pojdi s kvotami

Če niste vedeli, začetniki vlagatelji dobiček služijo na dva glavna načina:

Startup postane javna v prvi javni ponudbi (IPO); oz
Startup se pridobi.

IPO lahko vlagatelje v novoustanovljena podjetja privede do ogromnih dobičkov, vendar se IPO zgodijo zelo redko.

Najpogostejši način, da vlagatelji v startupe zaslužijo svoje dobičke, je s prevzemom – z drugimi besedami, ko startup, v katerega so vlagali, prevzame drugo podjetje.

To put the numbers in perspective: In 2020, there were about 480 IPOs. But during the same time frame, there were about 12,000 prevzemi.

Torej, kako lahko zgodaj opazimo morebitne prevzemne tarče – da lahko izplačamo velike dobičke, če in ko jih pridobimo?

"Vsaka bitka je dobljena, preden se sploh začne bivati"

Da bi odgovoril na to vprašanje, naj vam povem o enem od vlagateljev, ki smo ga srečali med našim raziskovalnim projektom zagonskih podjetij.

Preden je ta gospod postal tvegani kapitalist, je bil visok vojaški častnik.

Ko je naše pogovore začinil s sklicevanjem na »juriš na obale Normandije« in »bitko pri Little Round Topu«, je pogosto omenjal poseben izraz:

"Vsaka bitka je dobljena, preden se sploh izbojuje."

Ker se te besede nanašajo na vlaganje, je mislil naslednje:

Nekatera dejanja, ki jih izvedete, preden naredite naložbo, lahko določijo vaš končni uspeh. In eno najpomembnejših teh dejanj je naslednje:

Filtering out investments based on their vrednotenje.

Pomen vrednotenja

Vrednotenje je še en način za "tržno kapitalizacijo". To je skupna vrednost podjetja. Za javna podjetja pravimo tržna kapitalizacija. Za startupe pravimo vrednotenje.

In tu je stvar:

Kljub temu, kar berete v tisku o velikih prevzemih – kot je Facebook, ki kupi WhatsApp za 19 milijard dolarjev – je prodajna cena večine startupov nižja od 100 milijonov dolarjev.

Pravzaprav se po podatkih PricewaterhouseCoopers in Thomson Reuters večina prevzemov zgodi pod 50 milijoni dolarjev.

Torej, če je vaš cilj zaslužiti 10-kratnik svojega denarja na startupu, ki bi ga lahko pridobili za 50 milijonov dolarjev, kako »zmagati v tej bitki«?

Simple: invest at valuations of $5 million or less.

And that brings us back to Substack…

The $585 Million Startup

As you learned above, Substack raised $65 million in 2021.

At the time, its valuation was $585 million. That’s about 100x higher than we generally recommend. But keep in mind — that was during the boom-boom days, before the Federal Reserve started raising interest rates.

Since then, valuations have tumbled. So when the company went out to raise $75 million to $100 million from venture investors on favorable terms last year — TechCrunch reports it was aiming for a $750 million to $1 billion valuation — it couldn’t.

So a few weeks ago, it decided to raise money from the writers on its platform as well as from investors like you — at the “old” valuation of $585 million.

That doesn’t seem like a fair price.

What would be fair? Well, without knowing all the company’s financials, it’s hard to say. But media companies like The New York Times or Vox Media tend to trade at about 1x to 2x revenues. So maybe — maybe? — $20 million to $40 million.

In other words, unless Substack reveals that it’s on pace to do $250 million to $500 million in revenues this year — or plans to get there in short order — I’m compelled to state something plainly to you:

Do not invest in this funding round.

Izjeme od vsakega pravila

Očitno so pri vsakem pravilu izjeme.

For example, if you’re inspired by Substack’s mission — which is commendable and exciting — perhaps you might choose to support it.

And if you’re a writer who’s making his or her living from Substack, that’s drugo reason to support it.

Furthermore, if you have an expert to guide you, you can always consider investing in startups that are more highly valued. After all, many investors considered companies like Facebook or Airbnb “wildly overvalued” when they were worth $10 million or $100 million or $1 billion. Now they’re worth hundreds of billions.

Perhaps Substack is in the same rare air.

If you’re interested in learning more about Substack and its funding round, Klikni tukaj "

Ko pa šele začenjate z vlaganjem v zgodnji fazi, je pametna strategija, da se je držite omejitve naložb na zagonska podjetja, ki so ocenjena na približno 5 milijonov dolarjev:

Ta strategija vam bo dala največje možnosti, da potencialno zaslužite 10-krat več svojega denarja.

Skrbimo za vas.

Srečno vlaganje,

S spoštovanjem,

Matthew Milner
Ustanovitelj
Crowdability.com