Patreon, which helps fans fund their favorite podcasters, video makers and other content creators, is getting new funding itself.
The four-year-old startup has raised $60 million from a group led by Thrive Capital, which is re-joined by other previous backers including Index, CRV and Freestyle Capital. DFJ Growth is the new money in this round.
Patreon won’t release a valuation but says the $450 million TechCrunch floated last week is incorrect. My semi-educated hunch is that it’s not far off — perhaps it’s 10 percent too high. The company has now raised $107 million.
In any case, the real story here is that Patreon is one of the most interesting companies in media right now, as it appears to have gained real traction as an alternative to advertising for a wide variety of people who make stuff you can read, watch or listen to.
Lefty podcasters Chapo Trap House, for example, are generating more than $84,000 per month on Patreon, which is very good money for three dudes with a year-old show. Peter Vecsey, once one of the dominant voices in sports media, surprised lots of people this summer by resurfacing on the platform.
Patreon has a very simple business model: Fans give money to Patreon to pass along to their favorite content makers; Patreon takes a 5 percent cut and gives those content makers a platform to host subscriber-only content.
This year, the company says it is on track to process some $150 million in contributions from one million fans, spread out among 50,000 creators.
The knock on Patreon, from people who aren’t investing in the company, is that its 5 percent margin isn’t enough to build a meaningful business — and that it’s hard to justify a $400 million-plus valuation for a company that’s going to do $7.5 million in revenue this year.
The counter to that, says Saar Gur, a general partner at Patreon backer CRV, is that big platform companies like Shopify and Etsy started off with modest margins, too, and figured out ways to add on services. In the meantime, that 5 percent fee makes the company more attractive to creators than higher-priced competitors.
Conte says he eventually intends to create new services that he can charge additional fees for, but he also insists that he’s not in a hurry to do it.
“My personal belief, and the people who have invested in Patreon share this belief, is that the trend in favor of independent creativity is enormous — just bigger than most people think,” he told me last week. “And that 5 percent makes a lot of sense when you think of how big this can be.”
This article originally appeared on Recode.net.