Inside’s current funding round has a valuation cap of $30 million. Inside brought in $2.8 million in revenue from the beginning of 2021 through the third quarter. That figure represents a 55% increase from 2020’s $1.8 million. The company’s valuation has also seen marginal growth since its last round of fundraising, likely due to increased revenue, a growing user base, and product development progress. The company’s revenue multiple as of 2021 is average compared to newsletter marketing industry averages. The 10% valuation discount on this round’s SAFE further sweetens the deal for investors. Overall, Inside’s valuation is a fair deal.

Inside operates in the broad-ranging US digital newsletters and email marketing sector. In 2021, the global email marketing market was valued at $8.5 billion. The US accounts for roughly $1.3 billion of this market share. The market is expected to grow at an annual rate of 13.3% until 2027, which is significant compared to other forms of news and digital information providers in this space. Inside can also tap into the business-to-business advertising market and business-to-business trade show market over time. In 2021, an estimated 10.8 billion was spent on business-to-business digital advertising in the US alone. Overall, the market for newsletters and business-to-business digital advertising is large, giving Inside lots of room for growth.

Inside CEO Jason Calacanis founded the company in 2007. He is a highly regarded serial entrepreneur, established angel investor, and author. He led a successful $30 million exit and acted as an angel investor in more than 300 startups, including the first rounds of Uber, Robindhood, and Calm. Calacanis’ past involvement with LAUNCH, The Syndicate, This Week in Startups, and All In podcasts gives him extensive experience in online publishing, communications, and hosting events for investors and entrepreneurs. Calacanis has truly begun to serve as a leader and community builder within the entrepreneur and investor spaces, which gives him the needed background to scale Inside. 

Other members of Inside’s executive team include Alex Medick, Asheesh Barman, and Brian Warmouth. Medick serves as the CMO and comes from a background in full-stack marketing and design. Barman is the director of operations and has more than 20 years of business operations experience. He has a Bachelors of Science from John Hopkins University and Masters in Business Administration from the Quantic School of Business and Technology. Warmouth rounds out the team and acts as the director of research and editorial strategy. He has a Bachelors of Arts from the University of Illinois Urbana-Champaign and a Master of Science in journalism from Northwestern University. This group has proven to be a powerhouse of creative thinkers looking to revolutionize the digital newsletter industry for business executives. 

Finally, Inside’s  small executive team might raise concern moving forward. While current team members are experienced and look well-positioned to continue scaling the company, they  will likely need to welcome more team members to support current growth efforts. 

The market for US digital newsletters and email marketing is crowded and arguably antiquated, given the rise in social media platforms. With so many options for acquiring business news and networking services, it can be difficult to stand out amongst the competition. Traditional digital newsletter competitors include Axios, The New York Times, Morning Brew, and Business Insider, among others. Memberships, subscriptions, or suggested donation amounts vary across competitors. Axios has a suggested donation from $50 to $500 per year, Business Insider is around $10 per month or $100 annually, and Morning Brew is free as it generates revenue from selling ads within its content. Inside offers both free and paid newsletters to its readers, and it also generates revenue from ad sales. The company has gained financial traction and grown its revenue to a reported $2.8 million by the third quarter of 2021. From January 2019 to June 2021, Inside had 410 advertising customers, including many of the world’s most recognizable business-to-business brands. In maintaining recognizable clientele as advertising customers, Inside can establish itself as a more elite and trusted source for business news. However, Inside’s newsletter business model is not particularly innovative or different from its main competitors.

Inside’s virtual business events compete with other live and online events produced by various trade, business accelerators, and business-to-business event companies. There is a significant defensibility concern here as these events can be easily replicated by other virtual event organizations or business accelerators. Only 23% of clients repeatedly book ad space, accounting for 33% of revenue in 2021. If these percentages don’t increase it could cause financial turmoil and limit expansion of their customer base. . 

Finally, the Inside Slack community is an additional benefit for customers. Inside’s Slack community currently has more than 3,750 executive users (as of September 2021) who contribute to business channels, provide research, and advise each other on topical issues. Some channels include venture capital, hiring, raising capital, artificial intelligence, crypto, marketing, NoCode, and podcasting. Having an active community of members is uncommon, valuable, and offers a needed space for organic business brainstorms. 

Overall, Inside has limited differentiation and defensibility within the crowded business events and advertising market. Moving forward, Inside will need to further differentiate its product and services to remain relevant. Its business model will need to expand and innovate to continue gaining financial traction and relevance within the market.

Inside gained significant financial and community-based traction in the last two years. The company is backed by Sequoia Capital, Mark Cuban, and by founder and industry leader Jason Calacanis. Inside also raised $2.7 million on SeedInvest in 2018. The company increased revenue from $1.8 million in 2020 to  $2.8 million by the third quarter of 2021. From the third quarter of 2020 to the same period in 2021, it averaged an impressive 28% quarterly growth. Notably, the company has accumulated significant long-term debt of more than $3 million. Inside will need to become profitable in order to begin to offset its debt or else it may prove unsustainable.

The caliber of Inside’s subscribers has only increased in the last year and currently includes executives from top technology companies like Google, Apple, Salesforce, IBM, LinkedIn, and Netflix, among others. Elite subscribers that contribute to conversations, events, and group thinking exercises make the Inside community of business leaders more enriching. If Inside can continue to attract top executives and their firms, the company likely will outperform other popular online newsletters with similar offerings. 

Moving forward, Inside plans to introduce social networks similar to Reddit, Linkedin, and Quora. These Inside social networks will be driven by on-topic professional insights to further conversation and connectivity. In 2022, Inside intends to offer weekly events, which will likely generate as much or more revenue than its advertising revenue. Finally, Inside will introduce additional newsletters in emerging business topics in more niche business verticals. These newsletters will pull in new audiences from around the world all while leveraging the current Inside community. 

Inside’s elite user base and distinguished founder attracts business executives and ad revenue, which feeds its business model. If this business model proves to be successful, the company should be able to offset current long term debts in a timely manner. With encouraging revenue growth and significant customers, Inside’s performance thus far is strong.

Inside’s overall risk level is low. Inside’s most notable risk is rooted in its financials. The company has begun to generate a noteworthy amount of revenue, but it is not yet profitable and has accumulated significant long-term debt of more than $3 million. These financial concerns can likely be corrected, though, given how recent the company’s newsletter launch and community-building efforts are. Inside will likely need to move towards profitability or adjust its current business model to become profitable more quickly and repay its debts to ease the concerns of investors. 

Inside also has a team risk due to the small size of the executive team. Inside will likely need to welcome new team members to focus on marketing, sales, product development, and community development. These additional team members should help Inside develop and scale its offering even more quickly. Finally, Inside has a small market risk due to the saturated email newsletter industry. While Inside might offer a superior newsletter and business community compared to its competitors, it can still be difficult to stand out among other established newsletters. 

Since its last round in 2018, Inside has grown quickly. In 2021, Inside launched its first paid ads, which have driven event sign-ups. Inside produced 16 remote events and one live event. These events were successful in generating more than 22,000 new signups. Evidently, this model facilitates customer adoption, as those who sign up for events are given a free subscription to the newsletter and then access to the Inside community. 

As of the third quarter of 2021, Insider is able to convert new subscribers to paid users for as low as $2.12. That customer acquisition cost is very low compared to other newsletter subscriptions services and business products. New and existing customers appear to be heavily engaged with Inside’s newsletter product. In 2020, Inside reported a total of more than 37 million newsletter opens. The company’s revenue and revenue growth from 2020 to 2021 is also noteworthy. Inside reports $1.8 million in revenue in 2020 and $2.8 million from the first  to third quarter in 2021. Due to these positive signs, the KingsCrowd investment team continues to view Inside as a Deal to Watch.

Inside’s biggest concerns are competition, defensibility, and finances. It operates in a very crowded market where legacy newsletters and business journals dominate. Name recognition – along with a well-established readership – is vital for customer conversion and contribution to its business community Slack channels. As a relatively new email newsletter company, it could struggle to convert, keep, and engage customers. While the market’s growth rate is high, the email newsletter marketing space could very likely be phased out in the coming years with the rise of social media platforms disseminating information. It is unclear at this point about how social media platforms might overtake newsletters, but around a third of US adults continue to get their news regularly from Facebook. Without any patents, Inside could face challenges of attracting and retaining its customer base from social media giants like LinkedIn, Clubhouse, and other business networking platforms. Finally, Inside must work towards becoming profitable in the coming years. The company is generating revenue but has yet to fully prove its business model, which could be a concern for investors pondering profit margins. 

Inside is gaining financial traction, attracting loyal customers from elite business backgrounds, and growing its offering. The company’s revenue is steadily growing, and it boasts more than 3,700 active Slack community members. This large number of active users might be the start of network effect for a platform. Competition in the email newsletter industry is fierce, but it is not a winner-take-all industry. The company has many product offering niches to expand into as business trends and needs change. If Inside can establish itself as a trusted source for business news, information, and community building, it will likely do well in the market and acquire more engaged customers. 

Inside further stands out among existing competitors, given its strong backing by the entrepreneurial community and noteworthy founder. The company’s free-to-low price range makes its business newsletter more competitive and appealing to new customers looking to engage in business brainstorming and conversation. If Inside can acquire young business executives early on in their careers, the company can likely maintain those relationships and build long-term brand loyalty and relationships. Finally, with its strong executive leadership team, noteworthy investors, and start of network effect, Inside could become a leader in the business newsletter industry.

Inside turns traditional business news, information, and networking on its head. Inside helps business leaders discover new opportunities and solve challenges through their newsletters, events, and engaged online Slack community. 

Although Inside has a growing user base and noteworthy financial traction, it still has defensibility concerns because it offers a very similar product and community to current competitors in the business news and information space. Inside is left vulnerable as it operates in a crowded market that is rapidly changing and could be easily taken over by social media giants with similar offerings. If Inside is unable to expand its customer base and establish its offering, the company could lose its social and financial momentum. 

Inside’s founder, Jason Calacanis, is a well-established entrepreneur, investor, and advisor who has drawn attention and enthusiasm for Inside’s product offering. Inside saw steady revenue growth between 2020 and 2021 and boasts an engaged community. Inside’s growing customer base, promising start of network effect, and established team is encouraging for investors. All things considered, the current raise’s valuation is a fair deal for investors. Therefore, Inside has been given a Deal to Watch rating by the KingCrowd investment team. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Carolyn Price, December 17, 2021.