Medium Raises Another $31M

Summary

Medium Corp. has secured an additional $31M in funding, which may be primarily allocated to acquisitions rather than operational expenses or increased writer compensation.

Abstract

Medium Corp., a content platform, has announced a new round of funding totaling $31M, as reported in an SEC filing. This investment follows a previous$ 50M round in 2016, bringing the company's total funding to $163M since 2014. The timing of this funding coincides with Medium's acquisitions of Projector and Knowable, leading to speculation that a significant portion of the new capital may be used to compensate these companies' investors. While there is hope that some funds will support Medium's growth activities, such as writer bonuses and publication funding, it is anticipated that much of the investment will cover acquisition costs and operational losses. The continued interest from venture capitalists suggests that Medium is experiencing rapid growth, but it may also mean that special payment programs for writers could be curtailed as the company shifts focus from aggressive growth to sustainability.

Opinions

The author believes that the acquisitions of Projector and Knowable likely required a substantial cash outlay from the new funding, potentially leaving less for other operational areas.
There is skepticism about whether the new funds will lead to immediate benefits for writers, such as increased payouts or bonuses.
The author speculates that the acquisitions were partly funded with Medium stock, which could mean that not all of the $31M is being spent immediately.
It is suggested that the continuation of writer bonuses, contests, and referral rewards is uncertain and may depend on Medium's need to show growth to secure future funding.
The author expects that the new subscriber bounty program may be discontinued soon, as Medium's focus could shift from rapid growth to profitability.
The overall sentiment is that while Medium's growth is promising for the company's longevity, it may not directly translate into better compensation for writers in the near term.

Can Medium Now Afford to Pay Us More or Did It All Go to Acquisitions?

Medium Corp. has raised another $30,967,569 in funding from investors as of Nov. 5, according to this filing with the SEC.

That follows their last round of funding of $50M back in 2016 at a valuation of $550M. Their total funding since 2014 is now $163M.

What does this mean for us writers?

It’s probably no coincidence that the funding is taking place at exactly the same time as the acquisitions of not one company but two: Projector and Knowable. In particular, I’m guessing Projector cost Medium serious coin in cash as well as stock. (Analysis of Medium’s 3 recent acquisitions here.)

So my guess is that a significant portion of the new $31M went straight to the investors in Projector. They raised $23.5M in venture capital themselves, so it wouldn’t be surprising to see that amount paid out in cash to make their investors whole, with upside coming from a big chunk of Medium stock.

Knowable had raised $3.8M, so it’s possible most of the rest of the new cash went to Knowable’s investors. But my guess is the Knowable folks got paid mostly in stock. (See my analysis of the Knowable acquisition.)

It’s possible almost all of the $31M is going straight out the door, leaving little or none for Medium operations (that’s us!)

But it’s also possible that Projector and Knowable are getting mostly Medium stock so that most of the new cash is going into Medium’s bank account that they can use to fund growth activities.

By growth activities, I mean writer bonuses, contests, and referral rewards along with more funding for publications.

But that seems unlikely. I’m guessing half or more is going to the acquisition, and the rest to fund Medium’s operating losses for another year.

The good news is that the VCs were willing to fund the company to the tune of another $31M. That means the company is continuing to grow fast enough to keep investors excited to fund the company’s losses.

It also means that now that they’ve succeeded in raising money by showing fast growth, they’re likely to take their foot off the gas and end those special programs that help pay our beer.

Best guess, and this is pure speculation based on my experience working with startups, is Medium is doing well enough to keep going without big changes to the payments. However, the new subscriber bounty will probably be dropped soon (end of year?) and we won’t see costly bonuses again until the company needs to raise its next round of funding in another 12–18 months.

We’ll know more as soon as the official announcement comes out from the venture funds. That should tell us the new valuation and whether existing investors are staying in for the ride.

We soon should find out if Medium has officially become a unicorn. If the valuation hasn’t multiplied since 2016, the company is struggling to maintain growth. If it has jumped, then the company is going well and can afford to pay us writers better.