Last summer, Tucker Schreiber, a 28-year-old co-founder of a startup called Combo that is building a video editing platform, noticed a lot of emails in his inbox. Though his company has no employees and no product, and hasn’t even said it’s looking for money, investors have sent him a stream of messages.
“I started getting five to 10 emails every day for several weeks straight from investors,” he says.
Mr. Schreiber’s startup has attracted an explosion of investors targeting the so-called creative economy or influencers. The explosion of the creative economy itself has renewed interest in social media among venture capitalists, who for years have argued that there is little point in finding online upstarts. Social networks with names like Facebook and Snap (which owns Snapchat) are sucking all the traction out of the market. .
Creators are people who build online audiences and find ways to monetize those audiences. They are usually young natives who are trying to make a living from their social media jobs. And big investors in Silicon Valley increasingly see them as the next financial circuit to be tapped on the internet.
The creative economy, which provides digital tools to influencers and helps them run their businesses, is a vast, unexplored market. Venture capital firm SignalFire estimates that 50 million people around the world consider themselves content creators, while tech news site The Information estimates that venture capital firms have invested 2 billion USD into 50 creator-focused startups this year.
The growing interest from traditional venture capitalists could give legitimacy to what some might still think of as a fringe business. It may also add to the notion that this burgeoning world of dance, talk, and comedy isn’t just an ephemeral youth culture.
But as the saying goes, don’t invest in gold diggers – sell their stuff. Silicon Valley seems to be more interested in the digital tools and platforms used by content creators than investing directly in the creators themselves.
For example, last month venture firm Founders Fund led a $15 million investment round for Pietra, a startup aimed at helping influencers launch product lines. In April, Seven Seven Six, a venture firm run by Reddit co-founder Alexis Ohanian, and Bessemer Venture Partners announced a $16 million investment in PearPop, a platform that helps creators make money from their social media collaborations and interactions.
The list goes on and on. In February, popular venture capital firm Andreessen Horowitz led an investment in Stir, a platform that helps creators manage how they make money, valuing the company at $100 million.
Dispo, a photo-sharing app that emulates the experience of a digital camera, received $4 million in a funding round led by Seven Seven Six and a $20 million additional investment round led by Spark Capital head. Benchmark Ventures led an alleged $20 million investment round in Poparazzi, an app that allows users’ friends to post photos to their profiles, turning their cohorts into “hunters”. their photos” effectively.
And then there’s Clubhouse, a serious competitor to this nascent market, generating plenty of buzz from Silicon Valley as well as the worlds of media and entertainment. Clubhouse, which requires an invitation to join, is a social network built around audio-only chat rooms. In April, it raised $200 million in a funding round led by Andreessen Horowitz, giving it a valuation of around $4 billion.
“When I first started venture capital in 2016, there was a pervasive belief that” Li Jin, founder of Atelier, a venture firm focused on the world of online creators, said. really hard for another major social network.
TikTok has improved on all of that. By focusing on influencers, the app has forced a shift from traditional social networks like Instagram and Twitter that have shied away from serving people who are creating popular content on their platforms.
TikTok allows social media celebrities to be discovered more easily and offers them a clearer direct monetization path through the company’s Creator Fund, which pays creators generate a certain amount based on views.
“The older social platforms, it was all about interacting with your friends online,” said Linus Walton, vice president at Chernin Group, an investment firm. Now, “it’s all about being that influencer or becoming the new TikTok star all your friends are following.”
Subscription services like OnlyFans and Patreon, where fans pay creators for access to premium content, also help investors realize that there is a strong business case to build. tools for creators. Now, the word “creator” has become a buzzword, added to all types of businesses to attract investors. Too much for that Alexander Finden, a tech entrepreneur, coined the term “creator face wash”.
“There are more startups from the creative economy than creators,” said Turner Novak, founder of Banana Capital, which invests in early-stage tech startups. joke on twitter in April.
Rex Woodbury, a 27-year-old principal at investment firm Index Ventures in San Francisco, represents both worlds. He started out as an influencer, building an audience of more than 237,000 followers on Instagram by posting lifestyle content. After graduating from college, he devoted himself full-time to investing, where he created a niche as an authority in the creative economy.
“I’ve seen a few posts from VCs saying, ‘8 out of 10 companies I met today are innovative companies,'” Mr. Woodbury said. “It’s really trending right now.”
He joined Index Ventures in December, just as venture capitalists became interested in creators and were looking for help from those who knew the landscape.
“A lot of young investors feel trustworthy because we are digital natives,” Mr. Woodbury said. “This is the world we grew up in.”
Now, major 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 following its acquisition of the live audio startup Change Room. Twitter has added its own Clubhouse rival, Twitter Spaces, and both Twitter and Facebook are starting newsletter services to rival the success of Substack, allowing users to easily set up subscriptions to articles their.
As the line between venture capital and the world of creators blurs, many traditional venture capitalists are also looking to become innovators. Companies like Andreessen Horowitz have leveraged their investment in Clubhouse to promote their employees through the app’s recommended user list. Nait Jones, partner with Andreessen Horowitz, has amassed more than four million followers on Clubhouse and recently signed with the WME talent agency.
However, while investors are racing to pour their money into social media startups, it remains unclear whether some of the apps on the market will survive. Dispo, February’s most popular social media startup, faced backlash a month later after one of its co-founders, YouTube star David Dobrik, was pulled over during the controversy over sexual assault claims against a member of his “Vlog Squad”. Soon after, Spark Capital said it had severed all ties with the company. Seven Seven Six did not cut ties but said they would donate profits to an organization that works with survivors of the attack.
Poparazzi, which took the top spot among free iPhone apps in the last week of May, dropped to 156th by mid-June, according to app research firm Sensor Tower. And while Sensor Tower data reports that Clubhouse had 5.3 million downloads in the first two weeks of June, that’s 4.8 million for its Android app, which was introduced at the end of May.
Bobby Thakkar, 21, co-founder of Ampersand, a product studio dedicated to building tools for creators, said: “For years, no one cared or recognized this space as a space for money. real. “Now, with money pouring into the industry, we will only see more companies, more competition and more startups involving creators as part of their businesses.”