Given the staggering number of people using e-mail worldwide, newsletters delivered directly to people’s inboxes remain an effective method for capturing attention and promoting your content. Now, as a clear indication of the medium’s growing popularity, one of the startups that specializes in developing a platform for creating and distributing newsletters has just announced a new round of funding. Prepare to be impressed by Beehiiv’s recent achievement. The New York-based company has successfully secured a whopping $33 million in funding. With this substantial financial boost, Beehiiv is now poised to take its business to new heights and enhance the technical capabilities of its platform.
NEA is taking the lead in this Series B round, joined by Sapphire Sport and previous investor Lightspeed Venture Partners. The startup is keeping its valuation under wraps for this round, but it has successfully secured funding of $46.5 million.
We’ve seen some impressive growth recently, which has led to an influx of funds. Back in June 2023, Beehiiv’s $12.5 million Series A caught our attention. Lightspeed led an impressive round. At that time, the company boasted an impressive 7,500 active newsletters, reaching a staggering 35 million unique readers and generating 350 million monthly impressions. Currently, the company is sending out an impressive 1 billion emails per month through its network of 20,000 active newsletters. Although the exact number of unique readers remains undisclosed, it is safe to assume that this figure has also experienced significant growth. Newsletter users range from individual writers, including notable figures like Arnold Schwarzenegger, to larger organizations such as Boston Globe Media and Brex.
That seems to be a considerable number of newsletters, but Beehiiv is actively seeking additional ones. Over the past year, the startup has successfully developed and launched an advertising network that offers a variety of pricing options tailored to different features and functionalities. The company asserts that its customers generate approximately $1.2 million in monthly revenues on its platform.
CEO and co-founder Tyler Denk enthusiastically referred to the ad network they have introduced as a game-changer for advertisers. It has the ability to connect targeted campaigns with niche audiences who are highly receptive and likely to engage with them. He said that this also allows these newsletters to generate revenue through advertisements, similar to how Netflix sponsors them.
Whether it’s a niche market or not, digital advertising business models thrive on economies of scale. The key is to invest in expanding marketing efforts and securing partnerships with prominent publishers to increase the inventory available.
“We’re just two years into this, and we already have a billion emails being sent out,” Denk mentioned, describing the period from our founding in October 2021 until now as a remarkable journey of progress.
Clearly, that is the most challenging task to accomplish. Now that we have achieved scale, we are actively seeking network effects,” he stated.
Denk and co-founders Benjamin Hargett and Jacob Hurd have a shared history at Morning Brew, where they gained valuable experience leveraging newsletters. This background has influenced Beehiiv’s current focus on publishers and content. However, when questioned about the possibility of Beehive expanding into the realm of marketing emails, Denk did not dismiss the idea completely, leaving the door open for potential future exploration. “Email is just email,” he stated.
The company faces fierce competition from a wide array of rivals. Aside from Substack, which played a significant role in revitalizing the popularity of newsletters a few years ago, there are also open-source alternatives available. Buttondown and Ghost recently announced their plans to support ActivityPub, a move that will allow them to seamlessly integrate with other social platforms using the “fediverse” format. HubSpot and MailChimp, two services with a solid background in email marketing, are also in the mix. There are countless others, too.
Whether that will be sufficient to set the business apart in a highly competitive market is one challenge. Denk highlighted that Beehiiv aims to stand out by simplifying the process for customers to transition to its platform and seamlessly integrating it with their preferred CRM or other tools using an API.
One important challenge for Beehive will be accurately assessing and aligning the preferences of consumers and their customers. Among the latter group, publishers are expressing concern as they evaluate the increasing challenges of their jobs, which could potentially provide some relief to the newsletter industry in the near future.
They are grappling with the unpredictable nature of Google and its algorithms, the diminishing influence of Facebook as a traffic generator, the significant shift from reading online to the popularity of visually-oriented platforms like TikTok and Instagram, and the implications of all these changes on their advertising and traffic. Some may consider paywalls, while others may not.
Right now could be a great time for newsletters to thrive and for companies like Beehive to make a buzz (apologies!). However, the risk of reaching a saturation point is a concern, and this applies not only to popular mediums but also to viral platforms. Peak interest is also where the consumer challenge arises. Consumers have shown great enthusiasm for newsletter subscriptions in recent years. However, publishers face the challenge of maintaining that interest as readers’ reading lists continue to grow, which in turn affects the newsletter platforms.
Investors remain optimistic about Beehive’s future prospects, despite the numerous uncertainties that may arise.
“Email has proven to be a highly effective digital channel, but there is a significant opportunity for publishers to expand and capitalize on their newsletter audiences,” stated Danielle Lay, a partner at NEA. We are impressed by Tyler and his team’s innovative approach and their strong focus on customer satisfaction. We are excited to work with them to establish Beehiiv as the leading email platform for creators and advertisers.
