TechCrunch - How Slow Ventures is giving the creator economy a rebrand
Slow Ventures has introduced a $60 million fund dedicated to investing in content creators, recognizing them as a new class of entrepreneurs who build deep trust within niche communities. This trust allows creators to launch businesses with lower customer acquisition costs and higher lifetime values. The fund aims to support creators who are often underfunded and misunderstood by traditional investors. Megan Light from Slow Ventures highlights that creators can leverage their influence to build diverse businesses beyond their initial niche, as their audience is attached to them as individuals rather than just their content. The fund has already made investments in creators like Marina Mogilko, who has expanded her brand into various ventures, and Ed Bolian, known as VinWiki, who has developed an app alongside his automotive content. Slow Ventures focuses on creators who treat their work as a full-time entrepreneurial endeavor, have deep credibility in their niche, and demonstrate business-building ambitions. The fund's structure involves equity investments, with Slow Ventures having the first right of refusal on any spin-outs from the creators' businesses.
Key Points:
- Slow Ventures launched a $60 million fund for content creators, focusing on niche communities.
- Creators are seen as entrepreneurs who can build businesses with lower acquisition costs and higher lifetime values.
- Investments are made in creators who treat their work as a full-time business and have credibility in their niche.
- The fund supports diverse business ventures beyond the creators' initial content niche.
- Slow Ventures retains the first right of refusal on spin-outs from creators' businesses.
Details:
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2. 🎙️ Welcome to Equity, TechCrunch's Podcast on Startups
- Slow Ventures has launched a $60 million fund dedicated to investing in content creators, marking a strategic expansion into the creator economy.
- The fund is recognized as the first of its kind, specifically targeting the growing influence and economic potential of creators on platforms like YouTube.
- Emphasizing YouTube's role as a dominant platform for serious content creators, the fund aims to leverage this by fostering trust and engagement in niche communities.
- This investment underscores a broader trend of recognizing the creator economy as a significant growth area, with implications for how digital content is monetized and scaled.
3. 🌟 Megan Light's Path to Slow Ventures and Consumer Focus
- Megan Light joined Slow Ventures with a focus on the Creator fund, bringing her experience from consumer sectors, which is crucial for aligning creators with consumer behavior.
- At Al Catterton, Megan engaged in growth investing across consumer companies, including CPG, retail, and consumer tech, demonstrating her versatility in understanding different consumer markets.
- Her career path included transitioning from investment banking to early-stage consumer technology startups, where she was involved with projects incubated inside Walmart, showcasing her adaptability and strategic insight.
- Megan's interest in Slow Ventures was driven by the potential for creators to capture consumer mind and wallet share, an area she is particularly passionate about.
4. 🚀 Introducing Slow Ventures' $60 Million Creator Fund
- Slow Ventures raised over $60 million for a dedicated Creator Fund, supported by investors such as MIT, University of Michigan, and Ruckers.
- The fund is strategically designed to support a new class of entrepreneurs who excel in building deep, niche communities and leverage these connections for business ventures.
- This fund represents a shift in traditional business paradigms, focusing on community and customer relationships first, followed by product development.
- Despite traditional investors often misunderstanding these creators, the fund recognizes them as ambitious and capable of significant business achievements, similar to tech startup founders.
- The fund aims to address the underfunding of these creators, highlighting their potential for high returns due to low customer acquisition costs and high lifetime values (LTVs).
- By investing in community-focused entrepreneurs, Slow Ventures seeks to unlock substantial growth opportunities within the creator economy.
- The fund not only provides financial support but also plans to offer strategic guidance to help creators scale their businesses effectively.
- Slow Ventures' approach underscores the potential of creators to drive innovation and create sustainable business models within their communities.
5. 📈 Successful Creator Investments and Business Models
- The fund is actively making seed-stage investments in creators, allowing them to test various business hypotheses.
- Marina Mo Gilco, a language learning and immigrant entrepreneurship creator, has diversified her ventures by launching a baby snack company, demonstrating successful cross-industry application of her skills.
- Ed Bulling, also known as Vin Wiki, leverages his popularity in the car and auto niche to develop complementary tech solutions like an app, showcasing strategic expansion beyond content creation.
6. 🤝 Evaluating Creators: Traits of Entrepreneurial Success
- The newly formed Creator Fund supports creators in launching businesses, offering flexibility beyond specific niches.
- Creators have more 'permission' from their audiences to diversify product offerings compared to traditional brands.
- Example: Aloe Yoga's expansion from activewear to skincare felt disconnected, while a fitness creator can pivot naturally across fitness, skincare, and nutrition.
- Creators' audiences follow them for diverse interests, enabling broader entrepreneurial ventures.
- Additional Example: A beauty creator might successfully branch into fashion or wellness because their audience trusts their taste across categories.
7. 🔍 YouTube as a Hub for Investable Creators
- Creator investing shares significant similarities with seed investing, where the focus is on backing the individual rather than just the idea. This approach recognizes the potential for pivots or changes in direction, akin to the entrepreneurial journey in startups.
- The concept of 'keyman risk' is prevalent in both creator and seed investing. If the core individual (creator or founder) leaves, the idea or company may cease to exist, underscoring the importance of investing in people.
- Investments in the initial stages, whether in creators or startups, are often heavily dependent on the founder's vision and capability, highlighting the critical role of the founder in the success of the venture.
- For example, creators like MrBeast have demonstrated how individual vision and leadership can drive immense success, mirroring the startup world where visionary founders lead groundbreaking companies.
- Investors must consider both the potential for growth and the inherent risks associated with creator dependency, much like assessing a startup's scalability alongside its reliance on key personnel.
8. 🤑 Structuring Equity and Revenue in Creator Ventures
8.1. YouTube's Strategic Advantage for Creator Investments
8.2. Key Criteria for Identifying Investable Creators
9. 💡 Innovating with Spin-offs and First Rights of Refusal
- Evaluating business building ambitions involves understanding past efforts and gauging consumer engagement beyond content consumption.
- The advantage of some ventures is their community and acquisition advantage, enabling quicker revenue generation and company establishment compared to traditional founders.
- Quick scaling is facilitated by embedded audiences and distribution channels, surprising many regarding the speed and size of growth possible.
- The venture approach is primarily equity-based, with participation in net revenue above a certain threshold to protect interests if the business shifts focus.
- Creators are encouraged to develop more media-centric businesses if not pursuing traditional company building, with mechanisms ensuring participation.
10. 📊 The Emergence of the Creator Economy in Venture Capital
- Investment check sizes range from $1 million to $3 million, aiming for about 10% equity, sometimes varying slightly to accommodate specific deals.
- Equity investments are structured through a holding company, which includes the main company and any spin-outs, with investors having the first right of refusal on these spin-outs.
- An example is provided with Mr. Beast and Feastables, showcasing the potential for spin-out companies to attract further investment, underscoring the growth potential within the creator economy.
- Investors play a crucial role in structuring funding rounds, attracting additional investors, and bridging creators to Silicon Valley and capital markets, crucial for creators lacking these connections.
- The strategy is pioneering a potential new asset class within venture capital, termed 'Venture venture capital,' which may redefine investment approaches in the creator economy.
- Potential risks include overvaluation of creator-led ventures and the challenge of ensuring sustained growth post-investment, necessitating careful due diligence and strategic planning by investors.
11. 🛒 Building Trust and Authenticity in Creator Brands
- Lanch, a German company, raised $27 million to leverage social media influencers in developing popular food brands, showcasing a shift from traditional advertising to influencer-led brand building.
- The conversion rate for influencer-led marketing is significantly higher than that of traditional celebrity endorsements, as micro-community leaders possess greater trust and authority.
- Creators who identify and address specific problems within their communities are more successful, as their products are perceived as genuine solutions rather than cash grabs.
- Influencers maintaining authenticity despite venture capital pressures are crucial, as their business models should focus on creativity and community rather than mere profit.
- The trend is moving away from homogeneous culture to niche community-based interactions, driven by the internet's ability to connect like-minded individuals.
- Influencers are adopting strategies such as maintaining transparency about their motivations, collaborating with their audience in product development, and prioritizing long-term community engagement to maintain authenticity.
- Successful case studies include influencer-led campaigns where products co-created with audience input achieved higher engagement and loyalty metrics.
12. 🚀 Expanding the Horizons of Creator-driven Ventures
- Creators identify and validate real problems or white spaces using data and community feedback, leading to tailored solutions.
- They are embedded in their communities, receiving continuous feedback to build products specific to needs.
- The ventures span consumer packaged goods, marketplaces, tech ideas, and B2B enterprise software.
- Founders conduct in-depth research by engaging directly with communities, akin to observing their environments, such as truck stops for trucking software.
- Audience feedback provides insights into personal experiences and problems, aiding relevant solution development.
- Investor pitches receive varied responses; skepticism from traditional investors contrasts with enthusiasm from those familiar with the creator economy.
- Examples include creators launching successful consumer goods or tech solutions directly addressing community-identified needs.
13. 🗂️ Navigating Challenges in Creator Funding
- Investors in the Slow Creator Fund are interested because it offers a unique asset class distinct from traditional early-stage investments, indicating a demand for diversified investment options in the creator economy.
- Concerns about volatility in the creator market are prevalent, particularly regarding the sustainability of attention-driven content, suggesting a strategy to focus on niches and verticals that offer more stable, monetizable opportunities.
- The emphasis on niche and vertical markets allows for better diligence, with insights into category size, competitiveness, and spending patterns, aiding in more informed investment decisions.
- A preference for creators with an established track record exists, as it provides more data and community engagement metrics to assess potential, although new entrants are not disregarded.
14. 📬 How to Connect with Slow Ventures and Final Thoughts
- Creators seeking funding can reach out through Creator fund.co or directly email Megan at Megan@slow.com.
- Slow Ventures ensures efficient communication, promptly indicating if a proposal is suitable.
- Megan can be reached on Twitter at @MM and through LinkedIn for further inquiries or connections.
- The host is available on X and Blue Sky, formerly known as Twitter, for additional engagement.