Dstlry raises $5M for digital comics publishing and marketplace

Dstlry said it has raised $5 million for its next-generation comics publisher and digital collectibles business.

This seed round funding brings the total raised since the company’s inception in 2022 to $7.4 million. The funds will be used to secure additional content deals and expand features set for Dstlry’s digital marketplace, said David Steinberger, CEO, Dstlry, said in an interview with GamesBeat.

Steinberger said, “This latest investment and the addition of Gregory’s knowledge and expertise to our board is hugely significant for Dstlry and our ambitions going forwards. Our unique creator-owned ethos means we are bringing the best creators onto our platform and enabling them to generate new revenue streams through digital collectibles and other activations – many of which fans got their first taste of at Comic-Con in San Diego this month.”

This announcement follows Dstlry’s splash at San Diego Comic-Con (SDCC) 2024, where the company not won out an Eisner Award, but also sold out all their products and unveiled cutting-edge technology poised to revolutionize digital collectibles. It starts with being friendly to comic book creators, including giving 3% of its equity to creators releasing their projects in the first three years.

“We think of ourselves as a very premium comics and collectibles company with a collectible digital comics marketplace,” Steinberger said. “We created a model for the best of the best creators and give them equity over time.”

He noted that Marvel and DC hire creators who essentially do work for hire. The residuals that come from transmedia for comics — such as movies or other storylines — may not make much money for the creator. On the other extreme are creators who own 100% of their work but have to spend money on their own marketing and PR.

“There are very few creators in general, not just in comics, that can both do incredible work and have great instincts for social and do the marketing and run a business,” he said.

Robert Kirkman, creator of The Walking Dead, is an exception in that respect. But most comic creators are not good at the business side, Steinberger said.

“It’s just exhausting for them,” he said. “You’ve got all these publishers in the middle that take half your IP and completely control the rights and everything else.”

He noted that Dstlry pays royalties on cover fees and so it doesn’t have hidden fees.

“They get to have a living wage,” he said. “And we make collectibles worth collecting. On the digital side, we grade it and we sell our digital items. We sell the digital issues for a week. And if you don’t pick it up, we stop selling it. At that point, you can buy it from each other.”

Steinberger’s prior company was ComiXology, which he sold to Amazon. That gave someone a license to read a single issue for $5. Dstlry goes further with things such as proof, which is a real-life verification of live ownership in digital via a QR code.

At SDCC 2024, Dstlry’s talent and innovation were on display. The company was honored with multiple Eisner Awards (akin to the Oscars for comics), affirming its status as a leader in the comics industry. The accolades included Best New Series for Somna by Becky Cloonan & Tula Lotay, Best Anthology for The Devil’s Cut, edited by Will Dennis, and Best Coloring for Lee Loughridge’s work on The Devil’s Cut, Somna, and Gone.

Additionally, Dstlry’s booth was a hub of excitement, with all their products selling out rapidly, a testament to the high demand and strong fan base cultivated in less than a year since going to market.

Dstlry also debuted groundbreaking patent pending technology in the digital collectibles
market at SDCC. Leveraging their innovative Dstlry Remarques and Dstlry Proof systems, the company offers a new paradigm in digital ownership. The company has 10 people as Steinberger wants to keep it small, and it started in 2022.

Dstlry Remarques allows creators to add personalized digital signatures to their digital comics, making each edition unique and increasing its value. These personal touches provide fans with a closer connection to their favorite creators, akin to owning a piece of the creative process.

Dstlry Proof guarantees the authenticity and provenance of digital collectibles, ensuring that
each item is a verified original. Dstlry Proof is designed to revolutionize digital ownership benefits with in-person (IRL) digital ownership verification.

For instance, at SDCC, customers who owned digital editions of Somna or The Devil’s Cut used Dstlry Proof to verify their ownership and purchase exclusive items, like the limited-edition Mominu x Somna art toy, featuring designs by renowned artist Junko Mizuno.

“Dstlry is a next-generation comics publisher and physical-digital collectibles company
that is committed to equitable relationship with content creators, delivering the best content
to fans globally, and pioneering in the digital collectibles space,” said Chip Mosher, chief creative officer at Dstlry, in a statement. “This round lets us push those boundaries even further than we
have already.”

The $5 million investment round was led by gaming venture capital firm 1AM Gaming, with Gregory Milken joining the board of directors. Other notable investors include international publishing giants Kodansha USA and Groupe Delcourt, video game luminary John Schappert, tech strategist Mike Vorhaus, and producer Lorenzo di Bonaventura. That’s a lot of game people, with movie makers mixed into the investment group.

“We are thrilled to partner with Dstlry, a company that embodies innovation and creative
excellence,” said Gregory Milken, managing director at 1AM Gaming, in a statement. “David Steinberger and Chip Mosher are creative geniuses who are not just pioneering in the tech sphere, but also redefining the comics and digital collectibles industry. They have an uncanny ability to find the new frontiers in technology and entertainment that empower the most vital storytellers and enrich the fan experience . We can’t wait to see how they further evolve this space.”

Mike Vorhaus, from Vorhaus Advisors and an advisor to Dstlry, highlighted the significance
of this achievement in the current investment climate.

“Given the harsh environment for fundraising today, it is almost unheard of to see a startup
secure such a substantial round,” Vorhaus said, in a statement. “Yet, Dstlry has defied these odds, securing $5 million during this time—a testament to their unique value proposition and industry-leading innovation.”

He added, “This is the only startup I know of that has closed a round this big during the AI boom that didn’t have AI at the core of their business. David Steinberger and Chip Mosher, who previously collaborated on a successful venture ultimately sold to Amazon, have once again demonstrated their ability to navigate and thrive in challenging markets.”

Dstlry wants to stand out in the industry due to its commitment to creators. Unlike traditional comic publishers, Dstlry offers creators upfront fees, royalties from the first sale, and ownership in the company. Over 3% of company equity is distributed among all creators releasing projects in the first three years, with additional stock awards for founding creators.

I asked if we’ll see AI-generated comic books.

Steinberger said, “I do think there’s some experimentation out there. But honestly, I think all the AI is just going to lead to a higher value for verification of real human made stuff. We know with our creators they live and breathe and make their money from creation. I think there are lots of great tools for AI to you to be used on are for great uses. But making comic books I think is a personal and human kind of thing.”

The funding opens up a lot of possibilities. The company will be able to sign up more comic book creators and pay them advances.

“We got here in a step-by-step manner,” said Steinberger. “We have a track record with Amazon [thanks to the ComiXology deal]. We have talked about how hard it is to raise money in the last year and a half. In this atmosphere, you have to do that.”