How does a newsletter influence a company's valuation?
Hi everyone!
Earlier last week I found myself reading a very interesting IH Post/AMA by @antcas about how he sold a percentage of his newsletter for 5 figures, basically making a per-subscriber valuation.
This made me wonder, how do newsletters created within a larger company impact the whole business's valuation (meaning in front of a possible exit)? This February, I was advised by an M&A broker to start a newsletter to monetize the free users of my platform and boost its valuation, it was an idea I already had in mind (I think you can even find a post of mine here where I ask about it), but hearing it from someone in that space really convinced me, and I eventually launched the Lofi Brew, which is currently at 3200+ subscribers and growing by 50-100 per day without any marketing, just with two pop-ups inside the main app.
My question is, how do you think an asset like that should impact the whole company's valuation? Should it necessarily be making money by itself to be considered in the formula? Would the brand behind the newsletter imply a higher ad-placement price for possible sponsors?
Really interested in hearing your opinion!
I usually pay attention to the little details because they shape the overall impression. For example, how quickly pages load, how the navigation works, and whether there are any delays. I recently decided to test the new platform, and it turned out to be quite user-friendly. Everything works quickly, there's no unnecessary load, and you can play without any hassle. If anyone's interested, here's the link: https://wageon-h.click/73516/8357?l=3990&utm_source=wl
I'm not saying this is the best option for everyone, but my experience has been positive. Plus, payouts are processed without delays, which is always a key criterion for me.
it really depends on your strategy. i don't know what lofi brew is so it's hard to say. id say hire an expert consultant like Matt McGarry to help you wrap your head around it. i've seen some popular newsletters go for millions on their own, i've also seen them go for barely anything. depends on too many factors to give a black/white answer.
Hiring an expert is definitely a good idea when it comes to (relatively) large numbers, in my case it might be better to hire someone with a more general knowledge of SaaS valuations as the main business is definitely larger than the newsletter. I made this post mainly to discuss how creating a newsletter within an existing business may or may not increase its overall valuation and if so based on which metrics
Here's the post for reference:
https://www.indiehackers.com/post/i-sold-20-of-my-newsletter-business-for-10-000-ama-aa0e014fcd
I am running Micro SaaS HQ and here is my take on this.
If the newsletter is directly brining in any conversions, then it might add value in the company's valuation. Or atleast it should drive more traffic, more CTAs, more referrals or something around the actual business. Otherwise, not a big deal.
That's an interesting take! In my specific case, it doesn't bring more traffic or referrals, as it's directly (and only) grown from the app itself, but it could bring CTAs if one wanted to. What I think mostly influences the valuation is the potential ad revenue it could bring by selling sponsored slots, considering that I'm strongly against any type of ad inside the website/app, having some inside the newsletter sounds like a good compromise.
Not a good fit to advertise in a company owned newsletter that’s meant for product or industry updates.
Might have gotten the wrong idea, we don't share any product or industry updates in the newsletter I'm talking about here, we're in the b2c productivity niche and in the weekly newsletter we share a 500-800 words article about mindful productivity, book tips, desk setup inspo and other small columns. The mailing list where we share product updates is completely separate
Oh, then it should be fine to do some sponsored ads and yes this revenue will of course increase the total valuation in this case.
Well, it depends. A successful newsletter can indeed contribute to a company's valuation, but its impact depends on factors such as revenue generation, user engagement, subscriber growth, brand value, and synergies with the main business. The newsletter does not necessarily need to generate revenue on its own to be considered in the valuation, but it should demonstrate a clear connection to the business's overall growth and success.
It seems like you already have good traction, good luck!
Thank you for the insight!