Funding Subvert + Platform Preview Next Week
In just four months, 4,000 artists, labels, and supporters have joined Subvert as members. The response has validated what we believed: the world is ready for user-owned platforms.
Today, we want to share more on our plan for funding Subvert's next phase. We're committed to openly sharing all details, seeking member feedback and consent, and inviting you into the process.
Our Progress
To date, we've bootstrapped and self-funded Subvert's development. We’ve achieved:
- 3,960+ co-op members across 65+ countries
- $70k+ in revenue from zine sales and platform fee vouchers
- Growing community (13.5k Instagram, 7k newsletter subscribers)
- Member base representing 7,500+ artists and 25,000+ releases
Platform Development Progress
We’re building in public. This month, we sent out the first platform preview of the Artist Page for member feedback and received hundreds of pieces of thoughtful feedback, incorporated into future iterations.
What makes Subvert different isn't just its ownership structure - it's how we are building it together. Our next platform preview is February 20th, where we'll be reviewing the album/track page and checkout experience.
Why We Need Funding
Building Subvert requires resources. It’s one of the assumptions baked into our plan. In today’s dollars, Bandcamp’s early funding was the equivalent of $5-6M.
We need $365k to support a 6-month runway that will take us through platform development and launch. Here's exactly how those funds will be used:
With revenue offsetting some costs, our net funding need is $365,000.
How We're Structuring Investment
We've developed an innovative approach that maintains collective control while enabling necessary funding. Here's how it works:
Two Entities, One Mission
Subvert operates through two complementary entities:
- Subvert Cooperative LCA - The cooperative we're all members of
- Subvert Inc. PBC - A Public Benefit Corporation owned by the cooperative
Think of it like a startup with a solo founder owning 100% of founding shares, except that "founder" is our cooperative with thousands of members.
Investment Terms
We're raising funds through a SAFE (Simple Agreement for Future Equity) with unique terms that protect cooperative control:
- 25% discount on future equity rounds
- No valuation cap
- Side letter providing debt conversion option
Importantly, if we choose not to raise future rounds, the SAFE will not convert into equity, and can be repaid as debt with a 4x return. This gives our cooperative complete flexibility in determining its future path.
Timeline & Next Steps
Our immediate milestones:
- March 2025: Complete fundraising
- Q1 2025: Platform development
- Q2 2025: Public launch and beta testing
FAQ
Entity Structure & Investment
Why have two entities instead of one?
Raising sufficient capital as a standalone cooperative is prohibitively difficult in our context. Having two entities allows us to access traditional investment while maintaining cooperative control, protect member interests through clear legal structures, and create familiar investment vehicles for funders while shielding members from personal liability.
What prevents the corporation from acting against cooperative interests? Several safeguards are in place:
- The Cooperative owns all of the Public Benefit Corporation’s founding shares. This means we are very unlikely to dilute ourselves to a minority position in the Public Benefit Corporation.
- Investors in the Corporation are also members of the Cooperative
- Co-op members will represent that majority of Corporate board representation
- Legal obligations as a Public Benefit Corporation
Returns & Exit Paths
How do investors make returns?
Our approach to investor returns is guided by three key principles:
- Members democratically determine Subvert's path
- The cooperative maintains governance control
- Investor and member interests are fundamentally aligned, as users are owners are one-in-the-same
Potential paths to returns include:
- Co-op buyout: The cooperative buys out investors, returning preferred shares to full cooperative ownership
- Dividend Distribution: Once profitable, the corporation can distribute dividends to shareholders
- Partial alternative exit scenarios that maintain cooperative control (if members determine this beneficial)
Why include a 4x debt conversion option?
This unique provision in our SAFE side letter is designed to protect cooperative autonomy. It ensures that our future elected board has complete flexibility in determining Subvert's funding path. Even as we raise funds now, we're not locking ourselves into future fundraising rounds. If the cooperative decides not to raise additional equity-based funding, the SAFE can be repaid as debt with a 4x return, maintaining full member control over Subvert's future.
Participation & Control
What role do members have in funding decisions?
Members are encouraged to join the conversation in our members forum to provide feedback on investment terms, strategy, as well as connection to potentially aligned funding sources.Funding decisions are made in direct consultation with member feedback and sentiment to gain consent.
Who makes funding decisions now?
Currently, our initial 3-person board approves funding decisions (Austin Robey, Izzy Ocampo, Sean Adams). In April 2025, we'll hold our first board election where members will elect representatives from each membership class.
How To Help/ Participate
Three Ways to Help:
- Purchase a platform fee voucher (for Artist and Label members) - only 2 weeks remaining!
- Suggest aligned funding opportunities
- Participate in the members forum conversation
We Want Your Perspective:
- What organizations or individuals should we connect with?
- What are your hopes and concerns about Subvert's fundraising?
- Which funding approaches resonate with you? Which don't?
Share your thoughts by emailing dispatches@subvert.fm or joining the discussion on our members' forum.
Sincerely Ours,
Subvert