Substack challenger beehiiv expects revenue to nearly double on newsletter boom

Beehiiv’s flat-fee model attracts creators and journalists The platform has over 40,000 monthly active users and nearly 15,000 paid subscribers The startup has raised about $49.7 million in total funding since its launch in 2021 By Jaspreet Singh Jan 20 (Reuters) - Beehiiv expects to nearly double annual revenue to $50 million this year as the newsletter startup challenges larger rival Substack for a share of the booming creator economy, its CEO and co-founder Tyler Denk exclusively told Reuters. A flat-fee structure and an ad network designed to reduce creators’ reliance on subscriptions have driven the four-year-old startup’s growth, providing an alternative to Substack’s model which takes a 10% cut from writers’ earnings. Beehiiv now draws more than 40,000 monthly active users, including nearly 15,000 paying subscribers, with roughly one in seven new writers arriving from Substack, the company said. Widespread media layoffs and fading trust in the industry have pushed journalists toward newsletters that directly reach audiences, fueling demand for platforms that help build such businesses. Backed by New Enterprise Associates and Lightspeed Venture Partners, beehiiv has raised about $49.7 million in total funding and was last valued at $225 million, compared with Substack’s $1.1 billion valuation last year. “We have over two and a half years of runway. Profitability won’t come into frame until like 2027,” Denk told Reuters. The company, which uses a tiered model free until creators surpass 2,500 subscribers, has also attracted more than 130,000 publishers, including TIME, TechCrunch, The Ringer and Stocktwits. RIVALRY WITH SUBSTACK “Substack has just changed a lot from when I started,” said fashion journalist Amy Odell, author of “Anna”, a biography of Vogue editor Anna Wintour. Odell started on Substack in 2021 with her newsletter “Back Row”, turning on paid subscriptions a year later and eventually gathering more than 66,000 subscribers - before she decided to shift to beehiiv because of the flat fee model. Substack declined to discuss the revenue share. Since launching its mobile app in 2022, Substack has added features such as “Notes” and a TikTok-style video feed that have shifted its experience closer to that of a social network and driven paid subscriptions past 5 million. Beehiiv said it has no plans to launch a similar app currently and wants to be the “operating system for the content economy” by offering products, including its ad network and website builder. The startup takes up to a 20% cut of publishers’ ad revenue brought through the network, which is an opt-in feature and uses machine learning to connect marketers with suitable newsletters. The ad network is used by companies such as Nike (NKE.N) , and Netflix (NFLX.O) and is expected to generate up to $3 million per month this year, up from $1 million a month in 2025. AI THREAT, MEDIA STARTUP HICCUPS Substack and beehiiv are not the first startups trying new models for the struggling media business. Previous startups such as Medium struggled to scale after initially gaining traction due to venture capital backing. The companies also face a threat of the proliferation of AI-generated content that can be produced cheaply and quickly. “Ad dollars aren’t freely flowing and brands are holding creator marketing to higher measurements standards. AI has lowered the barrier to entry and increased the competition,” said Jasmine Enberg, co-founder at creator economy-focused media startup Scalable. Still, some writers remain hopeful. Richard Lawson, the former chief critic of Vanity Fair who launched the “Premiere Party” newsletter on Beehiiv in December after losing his job, said it was still early days but the venture removed the constant fear of becoming “redundant.” “People closer to me are making a really good living. I think maybe close to $20,000 a month possibly. And that would be strictly from subscription,” he said.