Substack began as a popular newsletter platform designed to help writers connect with paying subscribers. The startup criticized social media and rejected advertising. Almost eight years later, Substack is investing significant resources into creating a social network and becoming more receptive to the advertising industry.

To support those goals, Substack has secured $100 million in investments from backers, including the Chernin Group, which supports sports, media, and fan-centric ventures; BOND, a tech investment company; Rich Paul, the founder of Klutch Sports Group; Andreessen Horowitz, the venture capital firm; and fashion executive Jens Grede, a co-founder of the shapewear brand Skims. The funding round assessed Substack's worth at $1.1 billion.

Substack operates on a straightforward business model: Users pay to follow creators on the platform, and the company retains 10 percent of the income when these creators monetize a newsletter subscription or charge for podcast access. That strategy initially turned Substack into a refuge for writers, leading to over 5 million paid subscribers and a roster of publishers, such as short-story maestro George Saunders, historian Heather Cox Richardson, and a departure of journalists from conventional news environments.

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However, the new investors are wagering on a developing product that might enhance its operations. Substack's application, launched in 2022, enables users to interact with their preferred creators, view live video discussions, and compose and share posts on their feeds via Notes, a feature akin to the social platform X or Bluesky.

According to Chris Best, CEO of Substack, and its co-founder Hamish McKenzie, the Substack app currently boasts millions of users, attracting new creators and subscribers. In an interview, they mentioned that Substack intended to venture further into the advertising sector, which it had earlier condemned.

The sharp increase in Substack's valuation nearly 70 perecnt higher than its 2021 valuation of $650 million is a validation of that strategy from Substack's investors.

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"The network is growing. We're in this new phase where people can come to Substack and not just publish, but also find new audiences and find new opportunity," says McKenzie.