Patreon Raises $60 Million in New Funding to Scale Up Operations

Membership platform Patreon announced Tuesday that it raised $60 million in Series C funding, which will allow the company to scale up its team

Subscription News: Patreon Raises $60 Million in New Funding to Scale Up Operations

Source: Patreon

Membership platform Patreon announced Tuesday that it raised $60 million in Series C funding, which will allow the company to scale up its team and operations. This brings the company’s total funding raised to date to $107 million. This funding round was led by Chris Paik at Thrive Capital. Additional investors include CRV, Freestyle and Draper Fisher Jurvetson through partner Barry Schuler, according to TechCrunch. TechCrunch also said that the startup is valued at around $450 million.

CEO and co-founder Jack Conte, a YouTube star and part of the band Pomplamoose, made the announcement on Medium, addressing Patreon creators, who are artists, writers, performers and other creatives that use the Patreon platform to encourage their fans, or patrons, to subscribe to their work.

Founded in 2013, the company serves 50,000 creators in more than a dozen categories (e.g., video & film, comics, podcasts, games, writing, photography, etc.) who get monthly subscription payments from more than a million patrons. The average pledge per patron is $12. In 2017, patrons are expected to make more than $150 million in payments to Patreon creators, with some making more than $30,000 a month. What’s even more impressive is that creators are doubling their money on Patreon each year.

Why is Patreon so attractive to creators? Because Patreon only keeps 5 percent of subscription revenue. Compare this to the 55 percent that Facebook (for its new Watch product) and YouTube pay out to their content creators. At 5 percent, Patreon will earn about $7.5 million from the $150 million its creators will make this year. That’s a nice sum, but the $60 million in new funding will help the company scale much more quickly.

Subscription News: Patreon Raises $60 Million in New Funding to Scale Up Operations

Source: Patreon

With the new funding, Conte said Patreon can scale their business and expand their 80-member team. While Conte didn’t provide specifics about how they’d use the new funding, he provided a peek at the company’s two- to five-year plan which includes the business infrastructure needed to serve creators and rewards to encourage patrons to give.

In terms of creator services, Patreon will provide actionable analytics, dashboards for easy membership management, financial reports, rewards management, and patron management. In terms of patron rewards, Patreon breaks these down into three categories: the creator-patron relationship, exclusive, members-only content, and digital and physical goods. Conte said these services will be available on Patreon and other platforms, and they’ll be integrating rewards with third-parties so that patrons ‘feel special anywhere they go.’

Conte started Patreon to help other creators get paid for their work, so they could focus less on making money and more on being creative. He explains this in the funding announcement:

‘Maybe this sounds trite to say but, as a creator, I often felt like few people understood what I did. Not even my parents! Not my friends. And surely not tech platforms. Generally, I found that people didn’t really grok the impact I had on my audience. They didn’t understand the amount of work I had to do to make something worth watching. They didn’t understand the depth of care, complexity, or persistence that was required to be a full time, professional creator,’ said Conte.

‘I want Patreon to be different. I want creators to feel understood by Patreon. I want all 80 folks who work here, and the many more to come, to feel your pain and to feel your joy. I want us to see your trouble, and I want us to grasp the intensity of your grit. This depth of understanding will take time and, while we may never truly arrive, I believe that the Patreon team has the charge and fire to get closer than anyone has before.

It’s still the best time ever, in the history of humans, to be a creator. Right now. SO GO MAKE AWESOME STUFF!’ said Conte on Medium.

Insider Take:

You know we are big fans of creativity and innovation, and Patreon has plenty of both. The company took a need from the perspective of creators and matched it with a need from fans, or patrons, who want quality, original content. They put the two together and have created a multi-million-dollar enterprise that provides recurring revenue for creators – and for Patreon. We are excited to see them succeed and to evolve into something that supports the arts in a sustainable way.

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