The podcast industry is growing, but independent creators can still have a hard time making money. Now, they have a new option for bringing in some initial cash: a company called Podfund, which launches today, will begin making one-time investments in podcasts in exchange for a share of their revenue. The Podfund team has raised $2.3 million in its seed round, which will go toward investing in creators that they think have the chops to build a successful podcasting business. The company defines its potential investments as “emerging creator-led media companies with podcasts as a core strategy and driver of audience, brand, and revenue.”

The launch represents a new kind of funding model. While some new platforms, like Luminary, are paying creators to make exclusive content that’s only available through certain apps, Podfund says creators are free to take their show wherever they want. If they want to sign an exclusive deal, they can go for it, but they’ll have to share that revenue with Podfund. If they want to go on tour, license their IP, sell merch, or operate a subscription model through Patreon or Substack, they can do that, too, but Podfund will take a cut. A platform is only as good as the content that’s on it, but Podfund isn’t picking a platform or network winner. Instead, the team is talent-scouting the shows and makers they think have revenue-making potential.

At launch, the company says it’s already invested in Malcolm Gladwell’s podcast studio, Pushkin Industries, which makes shows like Revisionist History, as well as smaller creators, like Erica Mandy and her show theNewsWorthy. Podfund wants creators to put its investment toward whatever they might need — an editor, a producer, or some equipment, for example. In addition to cash, Podfund also gives them access to a team of mentors across the industry, including Max Linksy, co-founder of Pineapple Street Media; Dave Ambrose, managing director of Steadfast Venture Capital; Andrew Golis, chief content officer of WNYC; and Karo Chakhlasyan, chief operating officer of Chartable. Podcasters will be able to call on whomever they might need to help them grow their audience, create ad deals, or consult more generally.

Podfund is led by Jake Shapiro, who also co-founded the podcast listening platform RadioPublic, as well as the audio distribution and technology company PRX. Shapiro started developing Podfund in earnest last fall and finalized the financing and structure earlier this year.

He says in the three years that RadioPublic has existed, the team has witnessed an “evolution of the industry,” in which creators were building shows but needed more cash to grow. “[We saw a] cottage industry of podcast creators building small businesses,” he tells The Verge, and these creators come from all different backgrounds. “We realized beyond equipping them on the tool side, there was both a need and opportunity to have part of what’d be a capital, investment, and funding resource.”

The mentor network could be more interesting to some creators than the cash

The company’s terms outline how much cash Podfund anticipates doling out, along with how much it wants in return. The company says it’ll typically invest anywhere from $25,000 to $50,000 in a creator, and in exchange, the company will receive anywhere from 7 to 15 percent of a show’s revenue for between three and five years. Creators can get out of their revenue share contract at any time, which requires paying it back at a growing premium. Creators will need to pay 1.5 times their initial funding if they end their contract within their first year of working with Podfund, but by the fourth year, they’ll need to pay four times the funding.

Podfund’s general manager, Nicola Korzenko, says the investment isn’t a loan, and the team won’t come for a creator’s house if they fail to make money, but she plans to do her due diligence before committing to an investment. “We’re going to do everything in our power to help these podcast companies succeed, and we hope that they’ll be doing the same,” she says. “But we understand that not every podcast ends up being a huge business, so there’s some amount of that that has to be factored into the deal structure — that we know not everyone will end up with a happy ending, although we hope they all do.”

Most contracts will last between three and five years

Podfund looks for three main factors in a show before investing: whether it’s “poised for growth,” has “evidence of traction,” and if there’s any “initial revenue.” Basically, the company wants to see some existing success, which is how Podfund’s program varies from other companies’ hunts for creators. Spotify previously hosted a bootcamp that culminated in a pitching session for new women of color creators, and Google hosts its own creator program that requires a “fresh and compelling” idea, but not an existing show.

Shapiro doesn’t see these other initiatives as competitors, but as part of the same ecosystem to grow the nascent industry. “The industry as a whole is still so early and creating an infrastructure around training and professional development in different pockets of what you need as a traditional creator that I’m not concerned if there’s competitive overlap,” he says. “If anything, I think there’s a much bigger need.” (Google’s program is run by PRX, which Shapiro co-founded.)

Other companies are looking to invest in talent, too

The big question is whether independent podcasters can make enough money to not only support themselves but also prove to be a worthwhile investment. Shapiro cites Marshall Williams, the CEO of Ad Results Media, a podcasting advertising agency, as evidence that independent podcasting can support a venture business. Williams says there are between 500 and 600 shows that receive at least 50,000 downloads a month or between 60 and 75 minutes of listening a week, with four ad spots included. Those shows can net around $170,000 a year, he says.

To take that figure as an example, a show that makes $170,000 and gives Podfund 15 percent of its revenue would be handing over $25,500 a year. Given that Podfund says it’ll typically invest up to $50,000, the company would make its cash back in two years, and have the rest of the contract length to profit. That could be a compelling offer to Podfund’s own investors, which include Bloomberg Beta, Zelkova Ventures, and TechNexus. If a podcast or network turns into a sensation and gets acquired, Podfund will receive 1 percent of the total purchase price.

But Shapiro says the company isn’t requiring podcasters to be at any high level of success when they apply. “That’s not a threshold for Podfund,” he says. “We are open to podcasters well below those [Marshall-provided] numbers but with the right trajectory, temperament, and goals.”

A show that makes $170K a year could pay Podfund more than $25K a year

The company wants to see signs of success, but it also wants to get in early enough that its investment and mentor network still carries weight. Like any talent scouting mission, the hope is that most shows generate enough cash to keep Podfund afloat and able to keep investing in other shows, but also that the team will spot the diamond in the rough and potentially make a huge return.

Beyond the moneymaking endeavor, though, Korzenko says she hopes Podfund will create a portfolio of creators who can talk to each other and navigate the industry as a collective of sorts.

“I also had this dream that each of the creators that we pod fund have complementary superpowers,” she says. “And so each member of the Podfund community has something they can offer everyone else.”