The online influencer culture is starting to draw serious interest from big venture capital firms. But the real money could be in digital tools, not the personalities.
Last summer, Tucker Schreiber, a 28-year-old co-founder of a start-up called Combo that was building a video editing platform, noticed a lot more emails in his inbox. Though his company had no employees and no products, and hadn’t even said it was looking for money, investors were sending him a stream of messages.
“I started getting five to 10 inbound emails daily for a couple weeks straight from investors,” he said.
Mr. Schreiber’s start-up was riding a boom in 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 there was little point to looking for social upstarts with the likes of Facebook and Snap (which owns Snapchat) sucking all the air out of the market.
Creators are people who build audiences online and find a way to make money from those audiences. They are usually young, digital natives who are trying to make a living from their social media work. And big Silicon Valley investors increasingly see them as the next financial vein to be tapped on the internet.
The creator economy, which provides digital tools to influencers and helps them run their businesses, is a huge, largely unexplored market. The venture capital firm SignalFire estimates that 50 million people around the world consider themselves content creators, while the technology news site The Information estimates that venture capital firms have invested $2 billion into 50 creator-focused start-ups so far this year.
The heightened interest from traditional venture capitalists could offer legitimacy to what some may still think is a fringe business. It could also add to the notion 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 miners — sell them their tools. Silicon Valley appears far more interested in the digital tools and platforms used by the content creators than investing directly in the creators themselves.
Last month, for example, the venture firm Founders Fund took the lead in a $15 million investment round for Pietra, a start-up aimed at helping influencers launch product lines. In April, Seven Seven Six, a venture firm run by Alexis Ohanian, a Reddit co-founder, and Bessemer Venture Partners announced a $16 million investment in PearPop, a platform that helps creators monetize their collaborations and social media interactions.
The list goes on. In February, the high-profile venture 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 mimics the experience of digital cameras, received $4 million in a funding round led by Seven Seven Six and an additional $20 million investment round led by Spark Capital. The venture stalwart Benchmark led an investment round reportedly worth up $20 million in Poparazzi, an app that allows users’ friends to post photos to their profiles, effectively turning their cohorts into their “paparazzi.”
Source: New York Times
