Inside the Creator Economy

Demystifying Venture Capital #02: How can creators actually work with VCs?

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Author’s Note: This essay is part 2 of a 4 part series titled Demystifying Venture Capital. You can read part 1 here: The Origin Story of Venture Capital. 

“Creators are the future small business and small businesses are the foundation of the US economy.” 

— Adams Conrad

It is no longer an assumption, or an off-hand comment delivered with a good-natured laugh to a friend over coffee, that kids these days would rather be a Youtuber than an astronaut. 

It is an actual statistic. 

The “good ole’ days” of kids eating dirt and falling out of trees (safely, of course) have been replaced with kids religiously tuning into weekly content by Ryan Kaji – a 10-year-old who built a multi-million dollar empire out of recording himself playing with toys. 

With a staggering 34.2 million YouTube subscribers, “Ryan’s World” has allowed both of Ryan’s parents to quit their jobs and become full-time YouTube parents. 

This used to sound insane. Impossible. A pipe dream. 

The internet was initially designed for big institutions like ABC, AOL, and Yahoo! to control the narrative. The audience was simply the consumer; the “confirmed collective couch potato.” 

They were meant to ingest content, not spit it back out. 

How unnerving it must have been for those institutions when the emergence of the creator economy made those pipe dreams a startling reality.

Today, the creator economy is defined as: 

“The class of businesses built by over 50 million independent content creators, curators, and community builders including social media influencers, bloggers, and videographers, plus the software and finance tools designed to help them with growth and monetization.” 

Twenty years ago, blogging was a slightly embarrassing thing you confessed to doing in your free time. Now, entire careers are founded on once-trivial hobbies: cooking, traveling, rock-climbing, product reviews, and more. 

For years, people assumed “influencers” were disillusioned college girls doing everything they could to get out of a 9 to 5. Now, “influencing” is the new American Dream. 

In 2019, everyone made fun of Charli D’Amelio (Tik Tok’s most followed person) for filming herself doing silly little dances in her bedroom. Now, the 18-year old is making close to $18 million a year from deals with brands like Prada, Hollister, and Dunkin’. 

Do you hear that? 

Crickets. 

The creator economy is no longer something we joke about. It is no longer the soon-to-be future, either. It is the concrete Now. 

And something interesting is happening. 

Creators are increasingly becoming founders. 

They’re using their platform to launch startups and businesses they’ve always dreamed of starting – but never had the means to do so.

Take Charli D’Amelio, for instance. 

With millions of adoring fans and a platform that gave her a voice, Charli was able to launch a clothing line and a TV show with her sister; both of which have been a huge success within her fanbase. What started out as fun, after-school dance parties in her room quickly led to launching entire companies. 

And she’s not the only one. 

With millions of TikTok followers, Addison Rae launched her makeup company, Item Beauty, at just 20 years-old. 

Josh Richards is a 19-year-old TikToker turned CEO of CrossCheck – a content creation studio geared towards Gen Z that partnered with Mark Wahlberg’s production company.

Much like how Arthur Rock stood on the precipice of The Traitorous Eight, surveying the uncharted terrain of the individual, venture capitalists today are doing the same with creators. 

For example, Creative Juice offers creators up to $250,000 in exchange for equity in their Youtube channel. Redpoint Ventures commissioned creator Rashad Assir to simply make TikToks about venture capital.

Creators are, after all, the shiny new startups of the 21st century. 

Where does venture capital fit into the creator economy? 

The essence of venture capital is exchange.

Venture capitalists provide funds to startups that have promising growth potential. They offer resources, networking, and hands-on mentorship to help these entrepreneurs grow their business at a speed that wouldn’t have been possible without an investor. In return, investors will receive equity in the company and, in many cases, a seat on the company’s board of directors. Thus, the investors often will obtain some form of control over the company.

For some entrepreneurs, this trade-off isn’t worth it – and that’s okay. 

The same is true for many creators. Why would someone bother with seed funding when writing on Twitter and dancing on TikTok is completely free?  

But as creators shift into entrepreneurship, this mindset is evolving. 

Creators are looking to become first time founders and launch their dream project – and inevitably running into roadblocks along the way. Whether they need funding, guidance, resources, consultation, or a bangin’ network, something is often holding these creators back from becoming thriving and accomplished founders. 

While venture capitalists are committed to innovation and the unshackling of human creativity, it can be difficult for them to invest in actual creators themselves. 

Instead, they lean heavily into the 3 P’s of the creator economy, investing largely in the tools that allow creators to succeed (i.e. platform, payment, and process). 

Platform

A creator only succeeds with an audience. To gain an audience, they need the right platform to publish their content. 

Key word: right platform. 

For example, writers thrive on Substack; gamers thrive on Twitch; videographers thrive on TikTok; and so on. All of these platforms are optimized for different types of creators. 

These platforms not only provide ample opportunity for creators and investors alike to cash in on the creator economy, but they provide digital safe havens for specific groups of people for the first time in history. 

Etsy, for instance, was the first platform where moms could monetize their homemade arts and crafts. Now, moms everywhere have materialized from the shadows to turn their weekend passion project into a legitimate business with raving customers.

What other creators out there are waiting for this chance? 

When you provide an internet oasis for a specific group of people, you don’t just gain an audience – you gain fans. And fans are key for monetization.

Payment

Once a creator has an audience, they can start monetizing. This means tools and payment plans galore. 

Think Sellfy, Patreon, Stripe, and Creative Juice. 

It seems there are infinite ways to diversify creator payment tools: like how your followers can drop money into a virtual tip jar for you via Ko-fi, or pay for you to send them a personalized video via Cameo. 

Remember: we’re living in an age of abundance. Anyone can make money online. Streamlining the process of making money online is (you guessed it!) just one more way to make money online. 

Process

Once creators start monetizing, they become a business. And businesses need well-oiled, high-functioning systems to keep them running smoothly. 

From note-taking apps like Notion or Evernote, to idea generation tools like AnswerThePublic, to content scheduling apps like Hootsuite, the range of tools available for creators in this department is almost overwhelming. 

An unlikely contender emerging as a fabulous tool for creators is AI. 

Among creators specifically, there was a lot of anxious buzz that AI was going to take all of the jobs…but in reality, AI operates more like a ridiculously efficient executive assistant: generating research that would’ve taken hours in mere seconds; spinning together unique art that proves to be a much-needed breath of fresh air from Unsplash photos; and offering detailed editorial feedback on essays, articles, blogs, and even novels. 

So far, this is how investors back creators – by investing in platforms, payments, and processes. 

But, once again, we’ve arrived at the brink of a new frontier. 

Creators as investors? 

Let’s circle back to our friends Charli D’Amelio and Josh Richards for a moment. 

Not only is Charli now a millionaire, but she is using her millions to invest back into the industry with the launch of a $25 million early stage venture capital fund, 444 Capital. The fund will have “a particular focus on women and minority-led startups.”

Meanwhile, Josh has partnered with TikTok stars Noah Beck and Griffin Johnson to launch a $15 million venture capital firm called Animal Capital. 

Internet personalities and creators are increasingly moving into investing themselves. 

According to TechCrunch, “#founder has roughly 232 million views on TikTok, #entrepreneurship has nearly 800 million views, #investor has 1.2 billion views, #techtok has 12.4 billion and #entrepreneur has 22 billion views.” 

Curiosity is spiking. Self-proclaimed creators are now at least 50 million strong. “VCTok” is on the rise. And it is the beginning of a creator feedback loop. 

Liberating everybody’s “Plan A”

Katelin Holloway, a founding partner at VC firm Seven Seven Six who was named one of the five savviest creator economy investors in 2022, said: 

“I’ve seen a lot of people have their ‘plan B’ become their ‘plan A,’ getting a boring job and letting go of their creative dreams. When people have the tools to turn their creative pursuits into a livelihood, that is where true innovation is going to come from.” 

As we covered in the 3 P’s, investors have been hyper-focused on optimizing creator performance. 

But what would it look like if we could invest in creators themselves? 

This is exactly what O’Shaughnessy Ventures (OSV) has set out to explore. As well as investing in early stage opportunities, OSV is also finding new ways to partner with, incubate and support creators via its Infinite Media, Infinite Films and Infinite Fellowships verticals. 

Jim O’Shaughnessy said: 

“A genius has lived and died without anybody knowing…for the first time in human history, we can now find that person in Nairobi, in Bangladesh, and fund them.” 

Like Arthur Rock backing The Traitorous Eight, venture capital is finding a way to back creatives who possess all the skills, ambition, and ideas – but just need the means. 

And when you throw in the fact that creators are becoming investors themselves, it has never been a better time to be a creator involved with VC funding.

The mission at hand? 

Shed light on creatives who have been nestled in the shadows of their Plan C, D, and E – and liberate their Plan A.

The creator economy affects more than just bank accounts

You know that feeling you get at a concert? 

When you’re surrounded by hundreds of people you don’t know, but you feel strangely connected to them; not only through your shared taste in music, but your shared experience of being there together – watching the band live, swaying to the same song, inhaling the same second-hand cigarette smoke hanging in the air, drinking the same draft of kinda-warm-but-somehow-still-tasty beer. 

This is what the creator economy feels like. 

Backing individual creators not only liberates people to make a living doing something they love, but leads to a richer quality of content; crafted with love and passion; robust with purpose and meaning. 

When writers, artists, and entrepreneurs alike have the funds to quit their Plan C and pursue their Plan A full time, the world is a significantly more meaningful place. 

And as the ultimate unleashing of the unique human spirit, it cuts straight to the heart of everything liberation capital stands for. 

Thanks for reading this week’s essay on “Demystifying Venture Capital.” Next up, we'll tackle 5 stereotypes of venture capital -- and how OSV is pioneering change within the industry.