Hey, Content material Creators. Silicon Valley’s Buyers Need to Meet You.
Last summer, Tucker Schreiber, a 28-year-old co-founder of the start-up Combo, which was building a video editing platform, noticed a lot more emails in his inbox. Even though his company had no employees, no products, and didn’t even say it was looking for money, investors sent him a barrage of messages.
“I received five to ten incoming emails a day directly from investors for a couple of weeks,” he said.
Mr Schreiber’s start-up experienced a boom among investors targeting the so-called creator or influencer economy. The boom in the creator economy itself has renewed interest in social media among venture capitalists, who for years thought it made little sense to look for social upstarts since Facebook and Snap (owned by Snapchat) are sucking all the air out of the market.
Creators are people who build an audience online and find a way to make money with that audience. It is mostly young digital natives who try to make a living from their social media work. And big Silicon Valley investors are increasingly seeing them as the next financial artery to be tapped on the Internet.
The creator economy, which provides influencers with digital tools and helps them run their businesses, is a huge, largely unexplored market. Venture capital firm SignalFire estimates 50 million people worldwide call themselves content creators, while technology news site The Information estimates venture capital firms have created $ 2 billion in 50 creator-centric so far this year Start-ups have invested.
The increased interest of traditional venture capitalists could give legitimacy to what some still consider to be a fringe business. It could also add to the idea that this growing world of dance, chat, and comedy is more than ephemeral youth culture.
But as the saying goes, don’t invest in the gold diggers – sell them their tools. Silicon Valley seems to be far more interested in the digital tools and platforms used by content creators than investing directly in the creators themselves.
Last month, for example, venture firm Founders Fund took the lead in a $ 15 million investment round for Pietra, a startup designed to help influencers launch product lines. In April, Seven Seven Six, a venture firm led by Alexis Ohanian, a Reddit co-founder, and Bessemer Venture Partners announced a $ 16 million investment in PearPop, a platform that helps creators manage their collaborations and Monetize social media interactions.
The list goes on. In February, high-profile venture firm Andreessen Horowitz led an investment in Stir, a platform that helps creators manage their money making, which valued the company at $ 100 million.
Dispo, a photo-sharing app that mimics the digital camera experience, received $ 4 million in a funding round led by Seven Seven Six and another $ 20 million investment round led by Spark Capital . Benchmark Benchmark led a reported $ 20 million investment round in Poparazzi, an app that enables users’ friends to post photos on their profiles and effectively turn their cohorts into their “paparazzi”.
And then there is the Clubhouse, the heavyweight of this young market, which is causing a stir from Silicon Valley and the media and entertainment world. Clubhouse, which requires an invitation to join, is a social network based on audio-only chat rooms. In April, the company raised $ 200 million in a financing round led by Andreessen Horowitz and valued it at around $ 4 billion.
“When I first started venture capital in 2016, I believed it was going to be really difficult for another large social network to keep up,” said Li Jin, founder of Atelier, a venture company focused on the world the online creator focused.
TikTok turned it all upside down. By focusing on influencers, the app forced changes from traditional social networks like Instagram and Twitter, which had shied away from serving the people who created the popular content on their platforms.
TikTok made it easier to spot emerging social media personalities and gave them a clearer direct route to making money through the company’s Creator Fund, which pays creators a certain amount based on views.
“Older social platforms were about interacting with your friends online,” said Linus Walton, vice president of Chernin Group, an investment firm. Now it’s about becoming that influencer or becoming the new TikTok star that all of your friends are seeing.
Subscription services like OnlyFans and Patreon, where fans pay creators to access premium content, also helped investors realize that there was a strong business case for developing tools for creators. Now the word “creator” has become a buzzword that is attached to all types of businesses to attract investors. So much so that the tech entrepreneur Alexander Find coined the term “Creator Washing”.
“There are more startups in the creator economy than creators,” joked Turner Novak, founder of Banana Capital, which invests in early stage tech startups, on Twitter in April.
Rex Woodbury, a 27-year-old director of the San Francisco-based investment firm Index Ventures, represents a bit of both worlds. He started out as an influencer and built an audience of more than 237,000 followers on Instagram by posting lifestyle content. After graduating from college, he went full-time into the investment industry where he carved out a niche for himself as an authority on the creative economy.
“I’ve seen some posts from VCs that say, ‘Eight of the 10 companies I met today are creative companies,'” said Woodbury. “It’s really in vogue now.”
He joined Index Ventures in December just as venture capitalists were starting to take an interest in creators and sought help from people who understood the landscape.
“A lot of young investors feel credible because we’re digital natives,” said Woodbury. “This is the world we grew up in.”
Now big platforms like Spotify, Twitter and Facebook are rushing to catch up with startups, especially Clubhouse. Spotify recently announced its new live audio app Greenroom, a clubhouse competitor that Spotify built after acquiring live audio startup Locker Room. Twitter has already added its own clubhouse rival Twitter Spaces, and both Twitter and Facebook are launching newsletter services to rival the success of Substack in allowing users to easily set up subscriptions to their writing.
As the lines between venture capital and the world of creators blur, many traditional venture capitalists are also trying to become creators themselves. Companies like Andreessen Horowitz have used their investment in Clubhouse to promote their employees via the list of suggested users of the app. Nait Jones, a partner of Andreessen Horowitz, has over four million followers on Clubhouse and recently signed with the talent agency WME.
While investors are racing to put their money into social media startups, it’s less clear whether some of the apps in the market will last. Dispo, the liveliest social media start-up in February, faced backlash a month later after one of its co-founders, YouTube star David Dobrik, got involved in a controversy over allegations of sexual assault against a member of his “Vlog Squad “Was involved. Shortly thereafter, Spark Capital said it had severed all ties with the company. Seven Seven Six didn’t cut ties, but said it would donate profits to an organization that works with assault survivors.
Poparazzi, who took the top spot among the free iPhone apps in the last week of May, had fallen to 156th place by mid-June, according to the app research company Sensor Tower. And while the Sensor Tower data reports that Clubhouse had 5.3 million downloads in the first two weeks of June, it was 4.8 million from its Android app, which launched in late May.
“For years no one cared about this area or recognized it as a real money area,” said Bobby Thakkar, 21, co-founder of Ampersand, a product studio that makes tools for creative people. “Now that money is pouring into the industry, we’re just going to see more companies, more competition, and more startups that include YouTubers as part of their business.”