Patreon, the San Francisco, California-based subscription and membership platform, is well-positioned to pursue an initial public offering by late 2025, according to two sources familiar with the situation.

The company has held conversations with external advisers about its options and could decide to kick off a process in the second half of 2025 at the earliest with an improvement in market conditions, the two sources said.

No formal syndicate has been engaged as of yet, both said, but management has already met with external advisors.

The company has reached the right size, capital structure makeup and growth rate to aim for a public markets debut, one of the sources said, with its annual revenue estimated to be above USD 200m.

However, after reaching a high valuation of USD 4bn in a 2021 series F funding round, the company’s value dropped even though it remained above the USD 1.4bn, where it is still estimated to be, according to one of the sources.

One investor familiar with the company said that the company’s monetization-based core model could see a considerable threat from generative AI developments, with Patreon’s core function likely to be aggregated by other platforms.

“I would anticipate some pressure on its top line business” in the coming years, said this investor, who noted the rise of increased competition and the risk of “cannibalization.”

This issue will become more poignant as the company has been struggling to maintain consistent profitability and as other providers develop similar services, added this investor.

Tech IPO valuations have been recovering over the past year, as investors hungry for deals have started to once again show appetite for growth stocks. Patreon’s subscription model, which capitalizes on the growth of the creator economy, could capture investor enthusiasm if the market holds, the two sources agreed.

The platform enables creators to earn sustainable income through subscriptions, a model that capitalizes on the growing trend of direct fan support for content creators across various mediums, including artists, musicians and podcasters.

Patreon was founded in 2013 by musician Jack Conte and developer Sam Yam. Conte, frustrated by the limited income from platforms like YouTube, sought a way for artists to earn sustainable revenue from their fanbases.

Patreon did not respond to requests for comment.