Creators As Venture Capitalists
On the growing investments in — and from — our favorite personalities and influencers
Starting April 6, for the next 30 days, I’m writing a brief essay every day and posting it to my Medium account in an effort to get off social media and focus on doing something good for me, both personally and professionally. To read my last essay, click here.
I was listening to an episode of the Creator Economics podcast this morning that posed a fascinating question: should creators take equity or cash when deals present themselves?
The founders of the podcast sit in an interesting space. Reed Duchscher, the former North Dakota State football walk-on, founded his agency Night Media to manage YouTube talent headlined by Jimmy Donaldson (better known as Mr. Beast). Opposite Duchscher is Blake Robbins, a VC at Ludlow Ventures best known for investing in creator-facing products and brands from gaming collective 100 Thieves to coupon behemoth Honey.
Together, they bring their experience from flip sides of the coin: one has negotiated multi-million deals, the other has been the one writing the checks. For a space that’s growing quickly, Reed and Blake’s work in revealing the behind-the-scenes of the creator economy make for a super useful show.
Night Media’s latest project is Night Ventures, as together with Donaldson, Duchscher raised a fund in order to take concepts from the world of VC and invest in individual creators and their businesses. The thinking goes that creators are constantly innovating and pushing the boundaries of how to entertain, motivate, and connect people; however, when they’re just getting started, nothing’s more vital than an injection of cash to increase their burn rate and over-arching possibilities. Why not give them funds, mentorship, and a built-in network, then watch them run wild with their crazy ideas and scale a phenomenal ROI?
Duchscher isn’t the only one making moves. In fact, Tik Tok personalities such as Griffin Johnson and Bryce Hall have gotten their feet wet with angel investing, including a seed round for a friend of the brand in Lendtable co-founder Sheridan Clayborne. Sheridan actually put out a tweet thread at the time explaining why creators are perfect business partners:
But back to the initial question posed in the podcast. What should creators prioritize when it comes to business deals, equity or cash?
I think it obviously depends on the situation. From my perspective, if I were to go all in on my brand, I probably wouldn’t have the clout to demand a sponsorship deal from a brand or equity from a fund on the outset. Therefore, I’d opt to take an investment with the hope that it opens doors down the line and helps me grow my audience.
However, let’s say I was an athlete or an artist, someone coming in with the following already built in. I would always take the equity, particularly because with the current movement introduced by platforms like Patreon and new technology like NFTs.
On the podcast, Reed and Blake debate what they would do if they were a creator and a company like Honey approached them to do a deal. If I were in the latter position described above, I’d try to see how much equity I could get, then turn around and release a social token to increase the funds at my disposal. Not everyone has the following of a Logan Paul, yet when he’s making $5 million over the course of 24 hours after releasing his first batch of NFTs, it bodes well for what anyone with a following can accomplish.
The space is too intriguing, and I’d love to cut my teeth in Web3 at some point. When everyone from Paul to Tom Brady is building big business around the rapidly-changing creator ecosystem, you know that these innovations will proceed to dominate over the course of the next decade — and potentially beyond.