It turns out that if you have an active customer audience invested in the long-term viability and success of your platform, you can crowdfund a venture-sized extension round.

Substack, a venture-backed subscription media platform popular with writers and known for its email service, has collected more than $5 million in pledges for an extension to its Series B from its community and the internet at large. The sum pales compared to how much it raised in its early-2021 funding round worth $65 million, but it’s still real money and capital for a startup that reportedly shelved its Series C hunt.

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The company intends to share more financial data before its equity crowdfunding actually collects funds from its new investor group, figures that could shake up the amount of capital that it can raise; poorer-than-anticipated numbers could scare off some checks, while stronger-than-expected figures could help ensure that its ample pledge count becomes concrete in the form of capital in the bank.

I’ve covered the odd crowdfund before, including Juked.gg’s first and successful round that it put together on Republic; a later attempt by the same company to raise more didn’t work out, but the model has juice. Frankly, Substack’s rapid success in attracting more than the legal yearly limit for equity crowdfunding in the form of pledges indicates that the method of fundraising remains viable.

For some companies, at least. Substack is framing its crowdfund as a way for its users (customers, really) to buy into the platform they use. That’s pretty cool, frankly, and will provide its active users with a stake in their own platform.

The sticky bit is price.

When Substack wanted to go out and raise its next round of venture capital, it had to go through a pricing process. Reporting from the time indicated that its expectations were in the $750 million to $1 billion range. That price didn’t clear, given that the fundraising effort was called off. After that, the company tightened up its cost structure and kept growing.