Noah J Nelson on Monday, Jun. 23rd
Crowdfunding platform Patreon announced a 15 million dollar Series-A funding round today, bringing in a host of investors that range from Reddit co-founder Alexis Ohanian to Hollywood talent agencies.
While crowdfunding has become synonymous with project-based services like Kickstarter, the Patreon way emphasizes regular support of creatives. Instead of one time payments to bring about a particular product, patrons on the platform make pledges of continuing support. This translates into regular income for creators, as Patreon founder Jack Conte explains.
“There are a lot of creators who are making thousands of dollars on the site, and this is their rent money,” said Conte. “Their grocery money.”
Which makes the relationship between Patreon and its creator-clients a high stakes one.
“We have to pay them on time, every time. It’s like a salary. That’s a lot of responsibility. The site can’t break. We can’t be ten days late on a payment. We can’t skip one creator. Those have life altering impacts on creators,” said Conte.
It’s that sense of responsibility that is motivating the search for investment capital. According to Conte the site has processed two million dollars worth of payments since launching in May of 2013–with half of them occurring in the last two months alone.
Conte, who along with being the co-founder of Patreon is also a musician who uses the site, attributes that growth to the pent-up need to fix a broken system for creatives online.
“It doesn’t matter what kind of digital media you’re putting out on the web we’re all in the same sinking boat. In that we have readership–people who like our stuff. They connect with it, and they tell us that they connect with it and we build these communities and we spend time with these communities and nurturing relationships and at the end of the day we get our Ad Sense check and it’s $200 and we feel like shit about our lives and that’s just such a problem. It’s a psychological problem, It’s a financial problem, and it doesn’t make sense. It’s so broken.”
A robust group of investors see what Conte and his co-founder Sam Yam have. In addition to the aforementioned Ohanian, the Series A group includes Sam Altman (President of Y Combinator), Joshua Schachter (founder of Delicious), David Marcus (former President of Paypal), Stan Chudnovsky (VP at Paypal), and a host of others. The round was lead by Danny Rimer at Index Ventures (see Cruchbase profile).
Conte said in our interview that Index, which has backed companies like Etsy and Dropbox, “got” what Patreon is all about
“We talked with a lot of folks who didn’t seem to value the strength of Patreon’s community and the fact that it’s a site that comes with relationships as opposed to numbers and they go that. They understood what we’re trying to build and they’re not going to push us into directions that we don’t want to be pushed. They get the ethos of the site.”
That ethos is sharply creator-focused.
“One thing we’re trying to do at Patreon is make sure that everyone that we hire, every employee, every investor understands the accountability we have to creators. Understands we owe them, literally we owe them, but also we owe them because they’ve trusted us and they’re using our software to make a living.”
Conte says that the money is earmarked for expanding the engineering team and building a mobile app that “we need to get in people’s pockets.” In keeping with Patreon’s ethos the mobile app is envisioned as being a tool that creators can use to stay connected with their fan bases. Search & discovery, both on mobile and on the web, are a major technology goal for the company at the moment.