Humans are fundamentally artists - whether it’s storytelling, music, dance, painting, or anything creative. That’s what makes us different from monkeys, right?

But within the past 200 years, it’s been very difficult to survive as as artist, thanks to industrialization and capitalism.

While these institutions have helped humanity in some ways, it also doesn’t allow for much time or space to fully flourish creatively.

Then came the wave of internet, which democratized access and creativity for anyone.

One such musician YouTube is Jack Conte, who was getting millions of views on his videos, but earned only a few hundred dollars from the same because of fluctuating and undependable ad revenue.

He then had an idea of a membership platform where people can support their favorite artists and, in return, they get additional benefits for the same, like exclusive content, BTS, or early access.

He discussed the idea with Sam Yam, a software developer and college friend, resulting to the establishment of Patreon in 2013.

Currently, it is valued at $1.5 billion.

Let’s look at their start-up journey!

About the Founders & Why They Started

Jack Conte deeply understood the struggle of making a living through online content.

As a musician and YouTuber, Jack poured countless hours and effort into creating high-quality music videos.

However, even when his videos went viral, the earnings he received from YouTube ads were shockingly low.

He began to think about how creators could earn a more reliable income directly from their fans instead of relying on the fluctuating ad revenue that platforms like YouTube offered.

Him and Sam Yam conceptualized Patreon, a platform that allowed fans to financially support their favorite creators on an ongoing basis.

Sam's technical skills were essential in building the platform, and Jack's experience as a creator gave him unique insight into what creators needed.

The founders' shared mission was simple but revolutionary: empower creators to earn a stable income from the people who value their work.

They understood that many creators had dedicated fans who were willing to pay for the opportunity to support them more directly.

This alignment between the founders' goals and the needs of creators helped shape Patreon into the platform we know today, providing creators with a reliable source of income and creating a deeper connection between creators and their fans.

What Problem Does Patreon Solve?

For many content creators, making a sustainable income from their work has always been a huge challenge.

Traditionally, creators relied on platforms like YouTube, where they could earn money through ads or sponsorships.

But the issue with these models is that they’re often unpredictable. One month, a creator might see decent earnings, and the next month, they could experience a steep drop, depending on their content’s reach, algorithms, or ad revenue rates.

For smaller creators, this uncertainty made it difficult to plan their careers and finance their creative projects.

Patreon stepped in to solve this problem by offering creators a more stable and consistent way to earn money. Instead of relying on ads or sponsorships, creators on Patreon can make money directly from their fans, or "patrons."

This means that a creator’s income depends on how many people support them, rather than how many views their content gets.

On Patreon, creators can offer tiered memberships, where fans pay a small amount each month (like $5, $10, or more), depending on the tier they choose. In exchange, patrons get access to exclusive content, early releases, behind-the-scenes material, and other perks that the creator offers.

For fans, this is a chance for a more personal connection, as creators often interact with patrons more closely than with their general audience.

By doing this, Patreon solves the issue of unpredictable income for creators. This gives creators the freedom to focus on what they do best - creating.

This shift was also in line with the rise of the gig economy and the growing interest in crowdfunding.

Around the same time, platforms like Kickstarter and Indiegogo were gaining popularity, but they mainly focused on project-based funding.

Patreon, on the other hand, provided ongoing financial support, which was more sustainable for creators producing regular content.

Business Model

Patreon’s business model is based on a subscription model where creators set up tiered membership options for their audience. Here’s how it works:

• Tiered Membership:
  Creators can offer different levels (or tiers) of membership, where each tier provides different benefits.
  For example, a $5/month patron might get early access to content, while a $20/month patron could receive exclusive behind-the-scenes videos or personalized shoutouts.
  This makes it accessible for a wide range of supporters.

• Recurring Revenue:
  The key to Patreon’s model is that it provides recurring monthly income.
  Instead of relying on one-off donations or sponsorships, creators can build a steady, predictable income stream through ongoing support from their patrons.
  This allows them to plan better and invest more time and energy into their work.

• Patreon’s Commission: In return for hosting the platform and providing tools to manage subscriptions, Patreon takes a small percentage of the creators' earnings. Depending on the plan a creator chooses, Patreon takes anywhere between 5% and 12% of their monthly income.

  The three available plans - Lite, Pro, and Premium - cater to different types of creators:

  • Lite is a basic plan with fewer features.

  • Pro offers more tools for audience engagement and customization.

  • Premium is geared toward creators or teams who need additional services, like team accounts and higher-touch support.

• Scalability:
  Patreon has scaled its business by offering these multiple pricing tiers, which allows it to serve creators at different stages of their careers - from hobbyists who are just starting out to larger, professional teams managing a large fan base.

• Additional Features:
  To help creators grow their audience and manage their memberships, Patreon provides a range of tools, including analytics, community engagement features, and integration with other platforms like Discord and YouTube.
  These tools help creators understand what their audience values most and how to keep patrons engaged over time.

Patreon’s model works because it aligns its success with the success of its creators. If a creator’s fan base grows and they earn more, Patreon earns more as well, ensuring both parties have an incentive to thrive together.

This has allowed the platform to grow rapidly and help creators collectively earn billions of dollars since its inception.

Patreon’s Controversy:

However, even as Patreon expanded, it wasn’t immune to controversy.

In 2017, Patreon faced a backlash after announcing changes to its fee structure, which would have shifted transaction fees to patrons, resulting in higher costs for some supporters.

It announced that it would charge patrons 2.9% + a flat fee of 35 cents for every creator a patron decided to support.

This was done so that patrons don’t misuse the platform by signing up and then cancelling after getting the exclusive content at $0.

But with the new payment model, patrons were starting to drop out, leading to less income for the creator.

This went against the original goal of the company - to be able to support creators by helping them to earn and connect.

Patreon “got in the way of the creators and the fans”, as Jack Conte said later (source).

Patreon quickly rolled back the proposed changes and issued a public apology, acknowledging they had not considered the impact the changes would have on the community.

A good thing they did is they actually listened to their

Funding Rounds

Shortly after launching, Patreon raised its seed funding in August 2013 of $2.1M. Early investors included SV Angel and Charles River Ventures (CRV), among others.

In Series A round in June 2014, Patreon raised around $15 million, notably from Index Ventures and CRV again, showing continued faith in the company's growth potential.

By the time Patreon raised its Series B round in January 2019, they had gained significant traction in the creator community. With this funding, they raised $30 million led by Thrive Capital.

The company secured $60 million in its Series C round, again led by Thrive Capital and Index Ventures.

By 2019, Patreon had firmly established itself as a leading platform for creators.

In 2019, 2020, and 2021, it raised Series D, E, and F rounds of $60M, $90M, and $155M respectively.

Some major investors in these rounds included Glade Brook Capital, New Enterprise Associates, and Tiger Global Management.

Current Status:

Today, Patreon is a major player in the creator economy with more than 250,000 active creators, and 8 million patrons supporting them.

It has distributed over $3.5 billion to creators worldwide.

Patreon’s product offering has also expanded beyond basic membership subscriptions with community-building features like analytics and Discord integration.

However, the company’s valuation has dropped by 70%, from $4 billion in 2021 to $1.22 billion in 2024.

This can be attributed to 2 major reasons:

• The Covid boost is wearing off.

• They had deals with major Tik-Tokers like Lil Huddy and Larray, which fell flat when it came to driving results.

Because of this, Patreon has postponed its IPO plans in order to preserve cash - currently, it remains a private company.

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