Newsletter startup Beehiiv, founded just two years ago, has made a strategic acquisition by taking over tech platform Swapstack, according to the CEO, Tyler Denk. This move underscores Beehiiv’s commitment to providing advertising services to its clients, thus enhancing its appeal to content creators and expanding its overall revenue stream.
Background
Beehiiv, co-founded by Tyler Denk, Benjamin Hargett, and Jake Hurd in late 2021, emerged from their shared experience at the newsletter-focused digital media company, Morning Brew. Beehiiv has rapidly attracted notable clients such as The Boston Globe, Cult of Mac, and Superhuman.
Details
Beehiiv recently initiated its own ad network, albeit with limited staffing and manual operations. The acquisition of Swapstack injects more technological capabilities and expertise into this venture.
Swapstack, established in 2021, has facilitated over $2 million in transactions through its ad network. As part of this acquisition, two out of four Swapstack employees, including CEO Jake Schonberger, are joining the Beehiiv team.
Denk stated that creating an ad network had always been a long-term goal, noting the power of such networks from his time at Morning Brew. However, he also recognized the resource-intensive nature of building an in-house sales team and the related processes.
While the specific terms of the deal were not disclosed, it was reported that Beehiiv initially agreed to an all-cash acquisition that would partially reimburse Swapstack’s investors. However, Beehiiv later negotiated a lower amount, which, after the acquisition, will only cover the costs of winding down Swapstack’s platform by the end of the year.
Financial Context
Beehiiv has raised a total of $16.7 million, including $4.2 million in seed funding and a $12.5 million Series A round led by Lightspeed Venture Partners this year. The company’s workforce has more than doubled since the Series A round, employing around 40 full-time staff.
Beehiiv generates approximately $7 million in annual revenue, with the majority ($5 million) stemming from software service fees. The remainder is generated through client payments for newsletter promotion within the network and ad sales.
The Bigger Picture
Beehiiv entered the market during a period when major tech companies were developing their own newsletter platforms. Although some of these initiatives, such as those from Meta and Twitter, have since been discontinued, Beehiiv has positioned itself among the contenders in the competitive newsletter-focused platform landscape.
Denk acknowledged the financial strength of tech giants like Meta and Twitter to fund various initiatives, but he noted that their newsletter ventures are relatively small compared to their overall revenue.
Beehiiv, though not yet profitable on an annual basis, does not currently plan to raise additional funding. The company aims to become self-sustaining by 2024, highlighting its commitment to achieving financial independence.
