With the number of people using email worldwide approaching 5 billion, newsletters regularly sent to users’ inboxes continue to seem like a tacky way to get attention for whatever you’re writing. Now, in a sign of the medium’s popularity, one of the startups building a platform to create and distribute newsletters is announcing some funding. based in New York beehiiv has raised $33 million, funding it will use to expand its operations as well as the technical capabilities of its platform.
NEA is leading this Series B with Sapphire Sport and previous backers Lightspeed Venture Partners also participating. The startup is not disclosing its valuation with this round, but has now raised $46.5 million.
The money comes after some 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. Now, the company sends 1 billion emails a month from about 20,000 active newsletters (it didn’t disclose the number of unique readers, though that number will no doubt have grown as well). Newsletter users include both individual authors (plus individual “brands”: Arnold Schwarzenegger is among its clients) and larger organizations such as Boston Globe Media and Brex.
That sounds like a lot of newsletters, but beehiiv is looking for more. In the last year, the startup also created and launched an ad network that sits alongside a range of pricing tiers based on different features and functions. (The company claims that in an average month its customers collectively make about $1.2 million in monthly revenue on its platform.)
CEO and co-founder Tyler Denk described the featured ad network as a “holy grail” for advertisers because of the way it can connect specific campaigns with niche audiences who may be more apt to see and respond to them in these. “It also means that these newsletters can now be monetized with ads like Netflix’s sponsorship,” he added.
Specialized or not, digital advertising business models are based on economies of scale and so the focus will be on investing in more marketing and signing deals with bigger publishers in order to bring more inventory into the mix.
“We’re only two years into it and we’ve got a billion emails going out,” Denk said, referring to the period between the founding in October 2021 and now as “zero to one.”
“Obviously, that’s the hardest thing. Now that we have scale, we’re looking for network effects,” he said.
Denk and co-founders Benjamin Hargett and Jacob Hurd previously worked at Morning Brew—a publisher that really pushed the envelope on leveraging newsletters—and that background has lent itself to focusing primarily on publishers and “content” until now . However, when asked if and when beehiiv would ever explore building the other part of the newsletter business — focusing on email marketing — Denk wouldn’t rule it out over time. “Email is email,” he said
The company is not without a huge range of competitors. Besides 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. These include Buttondown and Ghost, which earlier this month said they would start supporting ActivityPub to integrate more closely with other social media platforms using the “fediverse” format. Services like HubSpot and MailChimp are also in the mix, coming from strong DNA in email marketing. And there are many, many more.
Whether this will be enough to differentiate the business in a very crowded pool is a challenge. Denk noted that one way beehiiv hopes to make a mark and differentiate itself from the crowd is by making it easy for customers to jump into its platform and, through an API, use it alongside any CRM or other tools they use. they prefer to use.
The other big task for beehiiv will be measuring and matching the preferences of consumers and their customers. Among the latter group, publishers are wringing their hands as they weigh the many ways their jobs are getting harder, and that may make the newsletter game a little easier in the short term.
They are fighting the vagaries of Google and its algorithms. the decline of Facebook as a traffic engine; the huge shift away from online reading to the rise of apps like TikTok and Instagram and their highly visual formats. and what this all means for their advertising and traffic. Some will consider paywalls, some won’t.
All of which means that right now may well be a prime opportunity for newsletters and companies like beehiiv to really pile in (sorry!). But “edge” – anything is a real risk – and these days that can apply to both tried and true media and viral platforms. The top interest is also where the consumer challenge comes in. Consumers have been very excited about newsletter subscriptions in recent years, but maintaining that interest as their reading lists grow is challenging for publishers and the connection to their newsletter platforms.
Investors still believe that even with these many what-ifs, there are big opportunities ahead for beehiiv.
“Email is one of the most resilient digital channels, but there is enormous untapped potential for publishers to grow and monetize their newsletter audience,” said Danielle Lay, NEA Fellow, in a statement. “We believe Tyler and his team are pioneers in this space and true customer-centric manufacturers. We are excited to work with them to establish beehiiv as the leading email platform for creators and advertisers.”
