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Patreon raises big round at ~$450M valuation to get artists paid

Patreon raises big round at ~$450M valuation to get artists paid
From TechCrunch - September 14, 2017

In an era where art is shared and streamed for free, Patreon offers new hope for turning content creation into a career. Illustrators, comedians, game makers, and musicians use Patreon to let fans pay a monthly subscription fee for special access to their work. In exchange, Patreon takes only a tiny 5% cut.

With 50,000 creators and 1 million subscribers on board paying an average of $12 per month for early and exclusive looks at their content, Patreon is on track to pay out $150 million in 2017. That means Patreon will only earn about $7.5 million this year despite doubling in size.

But investors are betting thatif enough artists sign on and bring their fans, Patreon could grow into a pillar of the new creator economy. TechCrunch has learned that Patreon has closed a big Series C round of funding, three sources confirm. Two say it values the startup at around $450 million and that Index Ventures participated in the round but didnt lead it. Patreon declined to comment for this story.

The cash should give Patreon the muscle needed to compete with other big platforms that help creators monetize, including YouTube and Facebooks new Watch tab of original video. While those two have massive user bases and teams to court artists, they only pay out 55% of the ad revenue earned off a creators content. With some more marketing to boost awareness that Patreon pays out 95%, and that direct payments from fans deliver many orders of magnitude more revenue that ad views, Patreon could gain ground.

To Fund The Creative Class

Musician and videographer Jack Conte had struggled to earn enough from his work, and found one-off project crowdfunding platforms like Kickstarter didnt provide the steady capital artists need to focus on creativity. So in 2013 he co-founded Patreon, whose mission it is to fund the creative class he told me in June. Advertising? It doesnt pay enough.Consumer payments has to be come a bigger portion of the financial mechanics that support art.

Patreon had raised $47.1 million to date up through its January 2016 $30 million Series B led by Thrive Capital and joined by Index that also participated in the Series A. But this big infusion of new capital could boost the confidence of creators in the platform. If they know Patreon isnt going to run out of money any time soon, they may be more enthusiastic about building a subscriber base for the long-run on the platform.

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