The whereabouts of the creator economy
Is the creator economy market still relevant? #47
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Content platforms have enabled mass distribution of content and a place for creators to be discovered by diverse audiences. This concentration of attention in the same environment brings a great opportunity for consumer brands to leverage it, using the distribution of these creators and platforms to achieve their commercial goals. This is the business model of several social media companies, such as YouTube and TikTok, and one of the elements that has allowed the emergence of the so-called creator economy.
To discuss this topic, I teamed up with James Song (former VC-investor, content creator, and entrepreneur) for this edition, to bring a deep dive and a list that we compiled with the current crop of exciting startups and insights from VCs active in the space!
The creator economy is as relevant as ever, and this can be demonstrated by notable deals between major creators and companies.
MrBeast closes a $100 million deal with Amazon Prime for his competition show, called Beast Games.
Dude Perfect, a YouTube channel formed by 5 friends, receives a $100 million investment from the growth capital firm, Highmount Capital.
Marques Brownlee joins Ridge as Chief Creative Partner, a company specializing in everyday tech products with distinctive design, such as wallets and travel accessories.
When we look at the VC market, the decline from 2021 to 2022 may be perceived as a slowdown, however, all sectors experienced a downturn during this period. According to data from Goldman Sachs, the addressable market could reach $480 billion by 2027, a significant increase from the current $250 billion. This growth is based on a clear driver: the expenditure of large companies on influencer marketing, which I see as the cornerstone of marketing in the coming years.
We are super bullish on this sector and believe we are yet to see those that will disrupt the market. Therefore, here are some startups we find exciting in LatAm:
For more details on those startups, click here.
To add to that, we were able to identify some investors who are actively investing or looking at this space, in LatAm:
Canary
Antler
Verve Capital
Daphini
Pedro Zuim (Angel)
Daniel Muniz Silva (Angel)
Ricardo Dias (Angel)
Alter Global
Atlantico
We wanted to understand more of what they are seeing, so we gathered some insights from some of them:
In my view, the Covid significantly accelerated an already-emerging trend in Brazil's Creator Economy, perhaps even excessively so. It facilitated an influx of ideas, enhancing the opportunities for individuals to monetize their unique skills through new digital channels and monetization platforms. These platforms are transformative, enabling creators in different scales to evolve their casual audience into dedicated "super fans" who are willing to invest financially in the content they value.
This shift is particularly fascinating due to the democratization it fosters within the content creation sphere.
As content creation costs continue to drop due to a lot of apps that are becoming more affordable or even free, the barriers to establishing personal channels for communication and monetization are lower than ever. In this dynamic environment, true talent emerges as the critical determinant of success, enabling the long tail of creators to thrive.
From an investor's perspective, the minimal barriers to entry in the Creator Economy pose substantial challenges. The vast openness of this space makes it difficult to predict who will succeed and what differentiates them, whether in curation platforms, monetization platforms, or community management. Furthermore, many of these ventures are highly specialized niche markets, which complicates attracting venture capital interest due to their limited mainstream appeal. These communities require constant engagement and stimulation, a task that is as crucial as it is challenging.
The Creator Economy in Brazil, therefore, stands at a crossroads of opportunity and challenge. On one hand, it offers a powerful platform for creative expression and entrepreneurship; on the other, it demands careful navigation and strategic foresight to discern the long-term winners in a rapidly saturating market. As the landscape continues to evolve, the key to success will likely hinge on a blend of innovation, community engagement, and the strategic use of evolving technological tools. - Marcelo Franco (Verve Capital)
Creator economy is one of the greatest opportunities in Brazil. With the expansion of mobile, internet, and computers, people have started to spend more time online, and consequently, on social networks. Spending more time means paying attention, and that is the best way to create a business that monetizes through ads, just like the history of print and television media. Brazilians' attention to the internet is, for better or for worse, massive. According to data released by Atlantico, they spend 9 hours online. That said, the creator economy will become the largest form of communication and awareness of Brazil's economy.
What excites me the most today are solutions that empower a middle class of creators. Currently, there's a Pareto distribution where a significant portion of the budget goes to the top of the chain, meaning creators with the largest audience.
There's a segment that delivers significant results in the long tail, often focused on niches, yet still struggles to monetize due to the difficulty of large brands to conduct scalable campaigns and the lack of tools to facilitate the process. Companies addressing this inefficiency are the ones that excite me the most.
I see that the main challenge is understanding which companies are VC-backable. It seems to me that the long-term value capture of the creator economy lies more in the hands of large platforms (Meta, TikTok, etc.) than in the tools. Few companies will be able to achieve "unicorn" scale.
Another challenge is the noise, that is, the excess of content across different verticals (AI plays a huge part), which could reduce the value per content and massively increase competition among influencers themselves. - Lucas Abreu (abreu newsletter)
Check out James’s newsletter, Not So Viral for insights from other investors.
If you know a great startup building on this industry let me know, and if you’re an investor looking at this industry let’s talk!
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Leticia, ótimo texto.Sou fundador da Nichoos uma plataforma de gestao de comunidades. Estou inserido nesse contexto e sinto os VCs com pés bem atrás em relação as barreiras de mercado e o quão promissor esse mercado pode ser.