Creative Patronage Startup Patreon Raises $15 Million
Patreon, the crowdfunding site designed by YouTube stars to fulfill their own wish for a system of modern patronage, has found some big patrons of its own. Index Ventures led a $15 million Series A round for the just-over-a-year-old startup.
Patreon has processed $2 million in pledges since May 2013 for its 25,000 creators, $1 million of that in just the last two months. Half of its users are YouTube video makers; the rest are comic strip artists, podcasters and writers. They all have their own fan bases that love them so much they guarantee recurring revenue.
The way the site works is this: Fans pledge a certain amount of money every time a unit of work is created — say, a single video. The average Patreon pledge is $7. For example, the a cappella group Pentatonix brings in $12,000 per video, guaranteed. The “Postmodern Jukebox” video maker Scott Bradlee was Patreon’s top grosser last month, because he puts out four videos per month and makes $3,900 per video.
The band Pomplamoose, half of which is Patreon co-founder Jack Conte, now makes more than $5,000 per video. Since Pomplamoose’s average video costs $300, and the band puts out two to three videos per month, Conte has not been taking a salary from Patreon. “They’re practically free,” said Conte, who has developed elaborate projection techniques and music video concepts that are complicated but not expensive.
Conte said his main concern in raising the round was pissing off the Patreon community. “Because we’re so cognizant of how venture capital can also be a dangerous thing, we do want to make sure our creators know how thoughtful this round was,” he said. “We spent a long time meeting a lot of folks.”
As for why the round is so gigantic, Conte said it’s because he doesn’t want to go back to the well anytime soon. Patreon is currently run by a team of 11 people out of a two-bedroom apartment that the founders also live in. The company needs 20 to 30 more engineers to build out features, Conte said, because the site is more complicated than it seems. “A lot of people misconstrue it as a tip jar,” Conte said (I’m guilty of using that term), “and it’s just a fundamentally different thing than that. What makes Patreon unique is [that] it’s a full CMS on the back end for creators.”
Patreon is also facing the imminent threat of competition from YouTube, which said last month it plans to roll out crowdfunding tools for creators. “It’s going to happen, I’m sure of it,” Conte said. “But we’ve just experienced just really significant growth, and the devil is in the details.”
Besides Index Ventures, the funding also came from Charles River Ventures, Thrive Capital, Freestyle Capital, Atlas Ventures, SV Angel, UTA, CAA and many angel investors. Patreon had previously raised $2.1 million from a subset of those people.