Two years ago, 23-year-old Rubén Dominguez Ibar was interning at Spanish VC Mundi Ventures and decided to write and publish some thoughts on a website which was “a bit of a thing”.
Fast forward to today and his Substack, The VC Corner, has over 87k subscribers, thousands of which are paid. He uses that income, along with ad money, to pay freelancers and invest in more startups.
“It changed my life,” he tells Sifted. “Founders have you top of mind, so they think of you when they want to raise money.”
Stories like these are becoming more common. Once mysterious wizards hiding in towers, conjuring deals behind velvet curtains, it’s now hard to stop VCs sliding into your inbox and LinkedIn feeds with hot takes, AI-powered advice and the occasional humble brag about their latest exit.
We’ve entered the substackification of VC, where investors are starting to create more and more of their own content, often long-form and often on newsletter platform Substack. And it’s changing how deal flow happens, how information spreads and who gets access to the industry’s inner workings.
A scalable way to run a VC?
In an era where money is cheap (for some) and attention is scarce (for most), Substacking clearly has its benefits.
“[Investors] become way more relatable,” says Maiken Paaske, a founder and former VC at Antler and a local Danish VC who has commented recently on this trend. “It both attracts and retains the attention and trust of the target groups that they’re trying to reach, which are founders, which are making up for their deal flow, LPs that make up for investors in the fund and co-investors in the form of other VCs.”
Historically a fragmented market with small firms around the world managed by partners relying on a tight-knit network of people they fundraise with and founders they know, Paaske reckons creating content is now one of the most scalable ways you can run a VC.
“It’s still a mystery to me why we’re not seeing all VCs doing this,” she says. “It’s so proven already.”
Andre Retterath, a Munich-based VC at Earlybird, is author of Data Driven VC, which now has over 50k subscribers on Substack. He says that some of Earlybird’s LPs came through his newsletter.
“There’s lots of capital chasing very few opportunities,” he says. “So for the good founders, capital is more and more of a commodity, and if you are the person responsible for deploying the commodity you need to stand out somehow.”
Of course, it’s not easy for everyone to build a successful Substack raking in ad money. Growing an audience can be a slog as you still have to navigate algorithms to promote your work on social media. All of this means there’s a growing industry of ghostwriters, content heads and AI tools circling around these efforts.
Berlin-based Francesco Ricciuti is a VC at Runa Capital, investing in deeptech and quantum. He started his Substack, Unbeaten Path, around a year ago, with help from his journalist pal, Chris Spillane.
“It’s really painful,” he says of trying to promote his newsletter regularly on LinkedIn. “I have a couple 100 people reading it and subscribing on Substack, so it’s really tiny. But for every post I put out, I have two or three founders reaching out.”
For Retterath, success has come from building a “muscle of repetition” — 300 episodes in a row. “I haven’t missed a single one, never, no holidays, New Year’s, Christmas,” he says. “The majority of people don’t get beyond doing 10 repetitions.”
Chasing the US
The substackification of VC arguably started in Silicon Valley — according to Marc Andreessen, a16z is “a media company that monetises via investing”. Big brands such as Y Combinator regularly publish content, alongside some high profile individuals like a16z’s Andrew Chen, 776’s Alexis Ohanian and Y Combinator’s Garry Tan. In Europe, Harry Stebbings, who turned a podcast, 20VC, into a fund of the same name, is often mentioned as the (sole) frontrunner.
“The US market is, content wise, already more competitive,” says Retterath. “In Europe, I would say there’s still a good opportunity to start out now.”
Ricciuti goes further and says the lack of European VCs engaging in content exposes one of the biggest problems in the industry: the lack of storytellers. He thinks that a reluctance to hype startup stories results in them not being able to break into the general consciousness of people outside the tech industry, and thus they can’t reach their full potential.
“We don’t know how to tell stories,” he says. “We don’t know how to get people excited about the stories.”
There’s also a lack of women VCs on the pathway to becoming media machines — perhaps, in part because there is a lack of women VCs. Paaske has built up a following on LinkedIn, but admits it’s hard.
“It’s hard to make a path in this line of work, being the only woman,” she says. “And then trying to put even more focus on yourself publicly, that’s very intimidating to do.”
A thin line between insight and clickbait
Substack is itself VC-backed, quite possibly by some of the Silicon Valley investors that were not too fond of how they came across in “big media”. But the rise of VC media brands mirrors broader shifts in attention economics, as tech media has fragmented and trust in institutions has waned.
In March, Substack announced it had 5m paid subscriptions, including a hefty 2m to accounts which publish video. In an effort to follow eyes and ears, Substack also offers video, podcasting and a Notes feed.
“My own feeling is that traditional media has slowly lost relevance, not because of Substack, but just slowly disappeared in everyday life,” says Ricciuti. “But people need information. People need to read things so, if not on traditional media, where?,” adding people are craving real thinking which isn’t AI generated.
Retterath, who says he and his team conducted a deep dive into the future of media last year, resulting in Earlybird making multiple investments in the content creation stack, adds that social media platforms have allowed individual people to reach the masses, and with that comes the ability to build credibility and trust with your audience.
It’s a sentiment that matches media polls that detail a move from trusting organisations to trusting people, but a truth which comes with a lot of responsibility — and potentially a lot of hype cycles, echo chambers and performative contrarianism.
“You have to be willing to fact check on your own and be aware that when you read from an institution, there’s some sort of control and process that controls what’s happening,” says Ricciuti.
“On Substack, it’s a guy putting out words, and it might be that it’s not true what they say, right?”
Read the orginal article: https://sifted.eu/articles/substackification-of-vc/
