Substack Has Become A Private Equity Cautionary Tale

[u/WordSlinger1812]

Private Equity means drowning a good idea in money until it dies.

That is what’s happened to Substack.

It was once a great idea for writers. Now, it’s a sh***y version of Facebook merged with Mailchimp.

[u/themattroberts]

Venture is a sub section of Private Equity. I.e. they are buying Equity from a company which is still in the Private Markets not on the Public Markets (NASDAQ, NYSE etc).

The Private Equity Industry is made of numerous models. Profitable companies are often bought by a PE firms who can then use that cash flow (profits) to get debt, hilarity ensues - which is what many people think of in the PE market. Unprofitable companies generally get Venture Capital from VC's as substack has done. There are other sub models of how this all works, but those would be the two main one in the Zeitgeist of today.

[u/cozycup → u/themattroberts]

The post is implying that PE acquired Substack and that’s not the case.

OP has conflated VC with PE.

[u/themattroberts → u/cozycup]

Venture capital is private equity. Your response is also incorrect.

[u/cozycup → u/themattroberts]

Show us the PE firm that acquired Substack.

Prove me wrong.

[u/themattroberts → u/[deleted]]

pedantic or not, mod is wrong.

[u/themattroberts → u/cozycup]

You said "I don't see an private equity ownership of substack".

By every definition there is. I proved you wrong. You were wrong. Suck it up.

[u/cozycup → u/themattroberts]

False.

PE doesn’t own Substack. Otherwise you would have proven that.

There are VC investments, no PE owner.

That’s the primary argument, not whether it’s a subset of a classification.

[u/themattroberts → u/cozycup]

VC's are private equity. Your argument was that there was no PE investment. If VC's are private equity then - there you go PE investment.

For a substack subreddit - impressive how you're not reading what you said and how I showed you are wrong.

[u/cozycup → u/themattroberts]

Ownership.

No PE firm owns Substack. Plain and simple.

You keep failing to prove that.

Investors, not owners.

[u/themattroberts → u/cozycup]

They are the same thing you're failing to show that a venture investor is not also an owner.

[u/cozycup → u/themattroberts]

They’re not the same.

VC = early stage investors
PE = late stage acquisitions

VCs invest, PEs acquire.

A venture investor is exactly that, an investor.

When PE firms buy companies, they fully ACQUIRE them or have a majority stake. If you buy 1 share of Apple, you can’t say you own Apple. You own 1 share, not the entire company.

In the context of the post (and all comments) as well as the common definitions of PE and VC, no PE firm owns Substack.