🎥 Content Creators are Challenging Legacy Investment Firms

Originally Published: April 6, 2022 (here)

We’re seeing an exciting trend unfold in front of our eyes.

It’s the emergence of Creator-Led Investment Firms.

In the past couple of months, we’ve seen multiple content creators announce venture arms. Namely, the D’Amelio Family, including TikTok stars Charli D’Amelio and Dixie D’Amelio, debuted their fund, 444 Capital and Sahil Bloom, prominent Twitter personality with an audience of 500K+, announced his fund, SRB Ventures.

This trend is signaling a change in the influence of capital, and it is largely going unnoticed.

Let’s unpack it.

A VC’s Value-Add

Companies raise venture capital funding for operational expertise, talent acquisition, marketing resources, and generally, to scale their business with the help of a capital partner. In the ecosystem, money has become an abundant commodity and companies are being funded at a higher velocity than ever before. It is commonplace for many startups to fail, but in the case of survival, a startup will likely contribute more output and productivity growth than mature counterparts. It is for that reason startups are an integral part of human progress.

Influence as a Superpower – Where Creator-Led Investment Firms Come In

Sequoia and a16z are incredible partners to grow your business, but there’s a new class of investors entering the playing field. Ones that are focused on funding differentiated companies and know exactly their value-add.

Will they win?

Well, let’s introduce the competitors:

D’Amelio Family: 444 Capital - $20MM Fund

Sahil Bloom: SRB Ventures - $10MM Fund

These two powerhouses are going to have a profound impact on the landscape. There’s a simple reason why – Content creators are growth multipliers for a business.

How Crazy This Is Going To Be

In his talk at This Week in Startups, Chamath Palihapitiya states almost 40% of every venture dollar goes right back into the hands of Google, Facebook, and Amazon to fund superficial growth. Instead of re-investing funding rounds into Google and Facebook Ads, SRB and 444 have the ability to significantly reduce or replace altogether the need for ad spend by a company. Imagine what will happen if startups are able more efficiently allocate their funding dollars to funding internal needs as opposed to monopolies. There will be an enormous unlock. And it is all possible because of creator-led funds.

With the power of distribution on their side, notably with real, everyday people, these two are uniquely positioned to grow a product's awareness and active users almost instantaneously.

It’s pretty crazy to think about.

Fund Size

As I was reading more about Sahil Bloom and the D’Amelio family’s funds, I noticed they raised smaller fund sizes than you’d generally see. Although it is their first fund, it could be a function of testing the waters, but as I learned more about it, it became apparent it’s actually the perfect size. By allocating smaller check sizes, it will be much easier for these content creators to hop in rounds for minor dilution with a unique value-add.

Worldview

Where one allocates capital is more often than not an accurate reflection of their worldview. It’ll be interesting to see which direction content creators believe the world is going.

What’s even more interesting is the idea that creators are a portal into the insights of everyday people. For every public decision made, a creator’s audience serves as a voting machine. For example, if an influencer invests in the adoption of heroin, their followers will react by blocking and unfollowing. On the flip side, if they make an undeniably great investment, there will be positive reinforcement from their community. It’s a cycle that can continue to make them stronger and a more influential, value-add partner to startups. In a way, the everyday person almost has a mini-stake in the success of these investors and startups.

It’s really a beautiful dynamic we’ll see play out in the next few years.

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