As the number of people using email worldwide approaches 5 billion, newsletters delivered regularly to people’s inboxes continue to look like an effective way to draw attention to what you’re writing. Today, in a sign of the media’s popularity, one of the startups building a platform for creating and distributing newsletters is announcing funding. New York-based startup beehiiv has raised $33 million, funding it will use to expand its business as well as the technical capabilities of its platform.
NEA is leading this round with participation from Sapphire Sport and previous backer Lightspeed Venture Partners. The startup is not disclosing its valuation with this round but it has now raised $46.5 million.
The money is coming on the heels of significant growth. When we covered beehiiv’s $12.5 million Series A in June 2023 (a round led by Lightspeed), the company had 7,500 active newsletters with 35 million unique readers and 350 million monthly impressions. Today, the company sends 1 billion emails per month from about 20,000 active newsletters (it hasn’t disclosed the number of unique readers, although that figure will no doubt have increased as well). The newsletter’s users include both individual authors (plus individual “brands”: Arnold Schwarzenegger is among its clients) as well as larger organizations like Boston Globe Media and Brex.
This looks like a lot of newsletters, but beehiiv is looking for more. Over the past year, the startup has also built and launched an advertising network that comes with a range of pricing tiers based on different features and functionalities. (The company says that in an average month, its customers collectively generate about $1.2 million in monthly revenue on its platform.)
CEO and co-founder Tyler Denk described the ad network he introduced as a “holy grail” for advertisers because of the way it can connect specific campaigns to niche audiences who might be most inclined to see them and respond to them. “This also means that these newsletters can now be monetized through advertisements like those of Netflix which sponsors them,” he added.
Niche or not, digital advertising business models are based on economies of scale. The focus will therefore be on investing in more marketing and signing deals with larger publishers, to bring more inventory into the mix.
“We’re only two years in and we’re getting a billion emails,” Denk said, referring to the period between its founding in October 2021 and today as “going from zero to one.” .
“Obviously, it’s the hardest thing to do. Now that we have scale, we are looking for network effects,” he said.
Denk and co-founders Benjamin Hargett and Jacob Hurd all worked together at Morning Brew – a publisher that really pushed the boundaries when it came to leveraging newsletters – and that context lent itself to Beehiiv’s primary focus on editors and “content” so far. However, when asked if and when beehiiv would ever consider expanding the other part of the newsletter business – focusing on email marketing – Denk wouldn’t rule out the possibility over time. “Email is email,” he said
The company is not without a wide range of competitors. In addition to Substack – arguably the startup that brought newsletters back into the conversation when it started blowing up a few years ago – there are open source competitors like Ghost, which announced earlier this month that it would start supporting ActivityPub to become more tightly integrated. with other social platforms using the “fediverse” format and Buttondown, as well as services like HubSpot and MailChimp coming from strong DNA in email marketing, among others.
Denk noted that beehiiv hopes to differentiate itself by allowing customers to easily migrate to its platform and, via an API, use it in tandem with the CRM or other tools they prefer to use. Whether this is enough to differentiate the company in a very crowded pool remains a challenge.
The other will be measuring and matching consumer tastes. Right now, editors are wringing their hands as they evaluate the many ways their jobs are becoming increasingly difficult.
They are grappling with the whims of Google and its algorithms; the decline of Facebook as a traffic engine; the huge shift away from internet reading in favor of the rise of apps like TikTok and Instagram and their highly visual formats; and what it all means for their advertising and traffic. Some will consider paywalls, others will not. All of this means that the current moment may well be a prime window of opportunity for newsletters and for companies like beehiiv to truly thrive. But “spike” – everything is a real risk, and these days that can apply to proven media as well as viral platforms.
Investors still believe that even with these many assumptions, there are still great opportunities for beehiiv.
“Email is one of the most enduring digital channels, but there is immense untapped potential for publishers to grow and monetize their newsletter audiences,” Danielle Lay, partner at NEA, said in a statement. “We believe Tyler and his team are pioneers in this space and true customer-centric builders. We’re excited to partner with them to make beehiiv the leading email platform for creators and advertisers.
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