ConvertKit

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Sacra estimates that Kit (formerly ConvertKit) reached $43M ARR in 2024, up 14% year-over-year from $38M in 2023, (not including transactional revenue from its ad network business) while maintaining 99.5% net dollar retention.

ConvertKit completed a secondary transaction through AngelList with 48 individual angel investors in 2021 that valued the company at $200M. With $29M in revenue for 2021, this implies a 6.9x revenue multiple.

Nathan Barry founded in 2013 as a way for online creators like him to better communicate with their audiences and sell goods like books and courses through email.

Key features of ConvertKit include:

CMS: ConvertKit offers a content management system (CMS) that allows users to write their newsletters directly within the platform as well as host their published emails on the web for easier distribution.

Landing pages & forms: ConvertKit offers customizable landing pages & forms that creators can use to host and sell products to their audience, along with templates for common use cases like waiting lists or 'coming soon' pages.

Visual automations: With visual automations, creators can set up trigger-and-action based flows for their subscribers based on their actions and behaviors, helping automate their email marketing based on events like a new subscriber joining their list, making a purchase, or completing a course.

ConvertKit has positioned itself as a powerful email marketing tool for creators, challenging traditional platforms like MailChimp and Constant Contact. Its primary aim is to provide an easy-to-use platform that combines functionality with simplicity, specifically catering to bloggers and e-commerce marketers.

ConvertKit operates on a freemium business model, offering a free tier along with two paid tiers: Creator ($29 per month) and Creator Pro ($59 per month)​​. This pricing structure allows ConvertKit to reach a broad range of customers, from hobbyist bloggers to professional e-commerce marketers.

ConvertKit's primary revenue stream comes from its subscription fees, which grow. based on the number of subscribers on a customer's list. This aligns the company's interests with its users: the more successful a user is at growing their email list and engaging with their audience, the more likely they are to continue using ConvertKit's services and move to a higher pricing tier.

The company has gradually expanded its market through strategic acquisitions. In 2021, ConvertKit acquired FanBridge, a service aimed at helping musicians with marketing services. More recently, it purchased Sparkloop, an email referral tool used to grow email marketing programs. These acquisitions have allowed ConvertKit to expand its suite of services and tap into new markets, such as musicians and newsletter creators.

While ConvertKit's focus has been primarily on email marketing, the company's long-term vision seems to be the development of a comprehensive suite of tools to help creators thrive. By adding more features and services that cater to creators' needs, ConvertKit aims to become a one-stop shop for online creators, helping them grow their audience, engage their subscribers, and ultimately, build successful online businesses.

ConvertKit competes with roll-your-own options like Ghost and Wordpress, alternative email newsletter tools like Beehiiv and Substack, and creator platforms like Kajabi, Teachable, and Podia.

Products like Ghost and Wordpress allow writers to spin up personal sites and email newsletters with means of charging readers for premium access.

This gives writers better economics, but leaves them on their own when it comes to distribution and design.

Beehiiv offers a similar basic toolset for creating emails, distributing them, building an email list, and monetizing it. Beehiiv similarly charge on a monthly SaaS basis rather than taking a cut of each transaction like Substack.

Companies like Kajabi, Teachable and Podia are in a different category of platforms that allow creators to build courses, communicate with their community, and create and distribute content. Like the other platforms mentioned above, they charge on a monthly SaaS basis instead of taking a cut of all the money that is paid to a creator, and so can offer better economics than a Substack.

Risks to ConvertKit's business model include:

Creator burnout: On Substack, the typical newsletter churns paid subscriptions at about 50% per year. While the last few years have been big for email newsletters, it's possible that consumers will hit email fatigue and there will be a significant pullback in how much people are willing to sign up for and read email newsletters in the future.

Migration: It's critical for email marketing platforms like ConvertKit to make it easy for consumers to export and own their audience if they want to be able to attract users to their platform. Of course, that opens up the risk that those users will eventually leave—tempted to another platform with more vertical-specific features or lower prices.