TThe Block is looking to raise $1.75 million from investors, according to documents reviewed by Modern Consensus. This follows last year’s raise of $2 million. Should the effort succeed, this second round of fundraising would value the cryptocurrency news and analysis site at $10 million. (For the full investment pitch deck, see below.)
The Block lost a lot of money last year and will lose more this year. Additional cash will be a much-needed shot in the arm for The Block, which bled $747,000 in 2018 and expects to shell out close to $3 million by the end of this year. They’re hoping for $1.1 million in revenue by the end of 2019, with $560,000 coming from subscribers, and the rest from ads.
If all their dreams come true, subscriptions will be even more crucial down the road for the site, started last year by Mike Dudas. Of the $5 million in revenue they wish to see in 2020, $3.4 million will come from subscription revenue (the rest consisting of about $1.1 million from ads and half a million from events). Meanwhile, they’re budgeting a spend of $4.2 million next year.
Again, these figures are hopes and dreams told to people with money to invest, not guarantees. (Reached by email, Dudas declined to comment.)
Their business model hinges on subscriptions. Right now, they have one service—Genesis—that goes for $1,000 per year or $125 a month, a price, they note in their pitch deck, that “can be expensed w/o approval.” But according to an investment memo by VC firm Pantera, The Block is tossing around an idea for an institutional tier with an annual bill of $5,000 that would “allow for more interaction with team and data layer.” Presumably, this means deeper engagement than getting stuck in a Twitter thread with perpetual tweeter Dudas. Another thought they have is for a lower-tier subscription for $399.
Yet it doesn’t appear that these ideas have been all that much thought out. “However, they do plan do [sic] conduct more diligence on media pricing and benchmarking before introducing these new tiers,” Pantera said in its investment memo. (A full copy of that memo can also be found below.)
Pantera emphasizes how quickly The Block has grown during its brief existence, noting that it has built 250,000 unique monthly viewers in less than a half year. That’s 5% of market leader CoinDesk’s 5 million.
VC firm Pantera is putting more money into The Block. Pantera is contributing an additional $100,000 to The Block’s latest round of fundraising after also participating in the first $2 million raised. An email sent on Thursday, April 11, to potential investors from an associate at the VC firm named Lauren Stephanian noted, “The total co-investment allocation is $10k, but we also have $650k of potential allocation on top of that.”
Some of the firms that put in money in the first round were Coinbase, Floodgate, GGV, Boost VC, Greycroft, and Bloomberg Beta.
The Block is trying to position itself as “dedicated” and “high value.” Speaking of Bloomberg, no pitch deck is complete without a matrix that features the company in the upper right corner quadrant. Indeed, The Block also included a slide called “Digital Assets: Crypto Media Competitive Landscape,” with an x-axis ranging from “low value” to “high value” and a y-axis ranging from “hobby” to “dedicated.” In the upper rightmost corner is, as expected, The Block, with nearby Breaker Mag and—surprise!—Bloomberg.
(Editor’s note: We assume Modern Consensus is so far out in the upper right corner that we could not even be featured in this matrix.)
This matrix is, of course, entirely subjective. No data was displayed to back up any of the placements. The New York Times, Forbes, Reuters, and the Financial Times, for example, were all lumped in the “Hobby/Low value” quadrant. Yet some of those publications have great crypto reporters. Nathaniel Popper plies his trade at The Times while Michael del Castillo, a former top reporter for CoinDesk, runs the blockchain beat at Forbes.
Pantera’s view is even harsher. While calling The Block “unbiased” and “one of the most trusted media sites in the [crypto] space,” Stephanian said that “the blockchain space suffers from a lack of reliable news sources.”
She added, “[n]ews sites like Bloomberg and CNBC that don’t solely focus on the space often miss a lot of coverage or report incorrect information, while news sites that do focus on the space are often susceptible to bribery and corruption, refusing to give coverage in some instances or giving too much in others.”
Mike Dudas’ feud with CoinDesk is alive and well. Amusingly, CoinDesk is mired in the upper left quadrant, indicating that The Block sees its larger competitor as “Dedicated/Low Value.” As Modern Consensus reported earlier this month, Dudas got into a nasty Twitter fight with CoinDesk editor in chief Pete Rizzo. When someone tweeted they’d like to see where CoinDesk will be versus The Block in two years, the official CoinDesk account tweeted, “We’ll save you the time, one will be a multimillion dollar company, the other will be a sad, lonely man on Twitter.”
We’re not quite sure where Mike Dudas’ personal life will be in two years; he may well be sad and lonely and on Twitter all day. However, if he succeeds in raising money and somehow manages to get about 5,000 subscribers paying one to five grand a pop, he may also be helming a multimillion-dollar company.
With additional reporting by Modern Consensus Senior Editor Leo Jakobson.