Substack Acquires Cocoon Team

Substack, a leading platform for subscription newsletters, announced today the acquisition of the team from Cocoon. Cocoon was a subscription-based social media application designed for maintaining close connections with friends.

Cocoon's Origins and Evolution

We previously reported on Cocoon’s initial $3 million seed funding round, led by Lerer Hippeau, in November 2019. This investment occurred just before the pandemic significantly altered social media usage patterns.

Initially, Cocoon aimed to provide a social network specifically for close friends. It was envisioned as an improvement over traditional text group chats.

Over time, the platform evolved, allowing users to create and manage more flexible social circles. Users could customize these circles to their preferences.

The application enabled sharing of text and photo updates. It also incorporated passive data, such as location and fitness statistics, to automatically update feeds for designated friend groups – similar to Slack channels.

Founders and Monetization

Cocoon was co-founded by Sachin Monga and Alex Cornell, both of whom previously held product roles at Facebook.

Unlike many social networking apps, Cocoon did not rely on advertising or user data for revenue. Instead, it implemented a $4 monthly subscription fee.

Substack's Plans

While the Cocoon app will continue to function independently, Substack is not acquiring the application itself. The focus is on integrating the Cocoon team into Substack’s operations.

This move aligns with Substack’s recent efforts to enhance community-building features for its newsletter writers. The company is actively seeking talent to further develop its platform’s functionality.

Substack's Recent Acquisitions

In March, Substack secured $65 million in Series B funding, achieving a $650 million valuation. This capital injection supports their efforts to establish a strong position in a competitive landscape.

Both Twitter and Facebook have launched newsletter products this year, increasing attention on this market.

Substack has been strategically acquiring smaller companies. Earlier this month, they purchased the debate platform Letter. In May, they acqui-hired the team from the community-building consultancy, People & Company.

Note: A previous version of this article incorrectly stated that the Cocoon app would cease operations following the acquisition. The app will remain available.