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Patreon raises big round at $450M valuation

techcrunch.com

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Re: Patreon raises big round at $450M valuation

#81

Post by [deleted] »

buro9 wrote: post #43
IshKebab wrote: post #28

Earlier quoted context omitted.

They have a fee of 5%. Let's assume they have a price/earnings ratio of 20, that means they expect people to spend something like $450m/year on Patreon. According to Wikipedia they are at around $150m/year already. I think it is totally feasible that they could increase that to $450m/year and not have to increase their 5% fee. Seems like a reasonable valuation to me.

It is 5% on top of payment processing, and averages around 10% for content publishers. I keep telling people just to use a PayPal Donate button. Unless you're in the top 1% of people on Patreon, you would do better just ensuring that more of the donations that exist ends up in your pocket. If Patreon isn't delivering more donors than your content and self-marketing can attract... you are losing out.

[deleted]

Re: Patreon raises big round at $450M valuation

#83

Post by whipoodle »

pc86 wrote: post #55
TaylorAlexander wrote: post #50

Earlier quoted context omitted.

They should make a profit. What we don't want is to spoil the nice service with desperate attempts to earn enough profit to satisfy investors.

Ah, so they should make a profit but not too much.

This is so stupid

Re: Patreon raises big round at $450M valuation

#84

Post by kruhft »

AVTizzle wrote: post #77
clarkevans wrote: post #60

This market segment might support a cooperative model, similar to Stocksy United ( https://www.stocksy.com/ ), where the artists collectively own the monetization platform. Stocksy bootstrapped with a 1M investment loan (not equity) which is now paid off. Now Stocksy is fully owned by artist-members.

Where can one find access to these 1M investment loans?

Build business (and personal credit) and go to a business bank with a business plan.

Re: Patreon raises big round at $450M valuation

#85

Post by wpietri »

buro9 wrote: post #43
IshKebab wrote: post #28

Earlier quoted context omitted.

They have a fee of 5%. Let's assume they have a price/earnings ratio of 20, that means they expect people to spend something like $450m/year on Patreon. According to Wikipedia they are at around $150m/year already. I think it is totally feasible that they could increase that to $450m/year and not have to increase their 5% fee. Seems like a reasonable valuation to me.

It is 5% on top of payment processing, and averages around 10% for content publishers. I keep telling people just to use a PayPal Donate button. Unless you're in the top 1% of people on Patreon, you would do better just ensuring that more of the donations that exist ends up in your pocket. If Patreon isn't delivering more donors than your content and self-marketing can attract... you are losing out.

I'm a relatively heavy Patreon user; I donate ~$100/month to ~12 different people. The PayPal donate button doesn't solve the problems that Patreon solves for me. Those include: providing long-term support, managing my ongoing support in one place, finding out what the people I support are up to, and getting a notion of how much support they're receiving.

I still do an occasional one-off donation to somebody who doesn't use Patreon, but as far as recurring billing for long-term support, this is all I use now.

Re: Patreon raises big round at $450M valuation

#86

Post by arikr »

Based on https://patreonhq.com/creators-have-made-100m-on-patreon-ddf..., seems like they are growing at about 2.4x/year.

They will do $7.5 million in net revenue in 2017.

Then assuming the growth rate doesn't slow (remember, growth rates usually get slower over time), $18 million in net revenue in 2018, and $43 million in net revenue in 2019.

Net revenue, not net income.

$450mm seems overvalued.

Re: Patreon raises big round at $450M valuation

#87

Post by wpietri »

Xixi wrote: post #70
pc86 wrote: post #55

Earlier quoted context omitted.

Ah, so they should make a profit but not too much.

The problem is not if Patreon is making enough profit to satisfy investors. The problem is if they don't. The reasoning goes as follows: VCs are chasing the next Google, and if Patreon cannot grow enough there is a real risk that it will die/resort to shady business practices by trying too desperately to achieve this growth. Without VCs it could remain a healthy, profitable, medium-sized company...

Exactly. It's the devil's bargain that you make when you take venture capital. VC is a hits-driven business. If it looks like you'll only be a moderate success, they will push you to take risks and spend more money in hopes of being giant. That will push up your odds of total failure and worse.

Re: Patreon raises big round at $450M valuation

#88

Post by chis »

payne92 wrote: post #82

I'm still wondering why Youtube isn't ALL OVER this model. Given that many are getting paid for publishing videos of what they do, it would be a great feature.

Yeah, it's really bizarre that YouTube is content to constantly struggle with ad revenue, when most of their top users are making orders of magnitude more money through patreon.

There's precedent too since twitch has had this exact model for years now.

Re: Patreon raises big round at $450M valuation

#89

Post by [deleted] »

Xixi wrote: post #70
pc86 wrote: post #55

Earlier quoted context omitted.

Ah, so they should make a profit but not too much.

The problem is not if Patreon is making enough profit to satisfy investors. The problem is if they don't. The reasoning goes as follows: VCs are chasing the next Google, and if Patreon cannot grow enough there is a real risk that it will die/resort to shady business practices by trying too desperately to achieve this growth. Without VCs it could remain a healthy, profitable, medium-sized company...

[deleted]
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