Investing in Creators
VeradiVerdict - Issue #217
CreatorDAO is a community of artists, creators, and designers who simultaneously produce amazing content and invest in one another. CreatorDAO’s $20M seed round was led by a16z crypto and Initialized Capital.
In recent months, venture has shown an increasing appetite for investing directly into creators and the content they produce. Jellysmack, a creator content solutions platform, recently raised from Softbank at a $1B valuation. Spotter also recently raised $200M from Softbank to help creators scale by investing in future ad-generating content. Slow Ventures launched a Creator Fund that invests in individuals in exchange for 1-5% of their future career earnings. These are just a few examples of how revenue streams are changing around creators and investors are eager to get involved in creator’s careers.
However, the industry still has yet to catch up with the rest of the investing world. Michael Ma, CreatorDAO’s co-founder, stated that even though $300B of VC money was invested in tech startups in 2021, less than $100M of that money was invested in creators. CreatorDAO was designed to fill this market gap in an innovative and community-oriented way.
The primary goal for creators is (by far) to grow their audience. Source: CreatorDAO and Patreon
Creators investing in each other through crypto + cash
CreatorDAO is a decentralized community that provides a strong network, operational support, and capital to creators at various stages in their career. In return, the DAO receives a percentage of the creators’ future earnings. Essentially, CreatorDAO is aiming to do what Pipe did for SaaS MRR (non-dilutive cash-flow management) to creator earnings. CreatorDAO’s thesis is built on the ideology that the growth of creators combined with crypto’s decentralization will accelerate profitable content creation.
When up-and-coming creators are able to get access to upfront capital and a strong community through a DAO, they’re more likely to both succeed financially and form deeper connections with their fanbase. In addition to a supportive community, the DAO can also serve as an initial audience and provide mentorship by leveraging existing member’s connections in the industry. Of course, there is also a huge financial incentive to see the creator succeed because the investors have a stake in their content. As CreatorDAO puts it: “the creators are the owners and investing in each other.”
CreatorDAO’s strong market position. Source: CreatorDAO
The DAO has a few key components that make it poised for success: it operates structurally as a group investment vehicle and socially as a mentorship and collaboration group. It also has an artistic edge as often, creators can find synergies between one another. Because of this, the DAO structure may be the best model for idea incubation and creation. CreatorDAO leverages a mutually beneficial model: with group ownership, the assets appreciate in value, and DAO members reciprocally benefit from voting and investing. CreatorDAO uses a new financial instrument that combines tokens and cash to pay creators – the expected value is split with part of the percentage in cash and part in tokens.
CreatorDAO offers capital, community, and mentorship to its members. Source: CreatorDAO
A team with diverse skill sets
CreatorDAO was founded by Michael Ma and Jonathan Wald. Michael is the founding partner at Liquid 2 Ventures and previously founded TalkBin, a customer engagement platform acquired by Google. He was also previously a Product Manager for Google My Business mobile and a Mentor at Binance Labs. Jonathan also spent time at Google as a Product Manager on the Search team, specifically its Knowledge Graph project. He founded Union7 Labs, a mobile computing platform, and Boiled Ocean, a software development company. The co-founders together have deep expertise in building companies and product management. With Michael’s VC background and Jonathan’s technical experience, the team is uniquely suited to serve creators seeking community and capital.
An emphasis on community
CreatorDAO intentionally places importance on community building as a natural byproduct of the DAO, rather than something that’s forced and used primarily as a pump of value. Because creators have an incentive to see each other succeed, we’ll see more collaborations and support from fellow DAO members through technology and tokens.
This message has clearly resonated: famous web3-adjacent creators like Paris Hilton, The Chainsmokers, Shawn Johnson, Joma Tech, Andrew East, Austin Evans, Nate O’Brien, and others have already joined the DAO for Season 0. The combined audience of these creators is over 100M individuals from around the world. Initial users include Garry Tan (210K+ Youtube subscribers), Joe Montana, and the East Family (1.35M+ Youtube subscribers).
Many famous creators have already joined the DAO. Source: CreatorDAO
To join, the DAO asks individuals to apply through a process similar to YC, and has seen huge interest: it recently received over 3,000 applications. CreatorDAO is focusing on expanding their internal team as well – they’re continuing to hire top engineering talent to create both comprehensive DAO infrastructure as well as an amazing user experience. As creator content revenue streams are revolutionized, and community becomes ever-important in the industry, CreatorDAO will increasingly become the most attractive organization for both new and existing creators to grow their careers, gain mentorship, and access capital.
- Paul Veradittakit
Pantera Capital Puerto Rico Management, LP and its affiliates (“Pantera”) makes investments in crypto assets and in blockchain-related companies. Pantera and/or its affiliates or personnel may be an investor in, or have relationships or other business arrangements related to, certain instruments, companies and/or projects discussed herein. This document does not contain any advertisement for Pantera’s investment advisory services, or any other services or products, whether provided by Pantera or otherwise. The information and opinions presented in this document are solely those of Paul Veradittakit; they do not represent, and should not be interpreted as representative of, the views of Pantera or any other individual working for Pantera, and do not represent investment, legal, tax, financial, or any other form of, advice or recommendations. Neither Pantera nor Mr. Veradittakit is acting, or purports to act, as an investment adviser or in a fiduciary capacity with respect to any recipient of this paper. Information contained in this document is believed to be reliable, but no representation is made regarding such information’s fairness, correctness, accuracy, reasonableness or completeness. There is no obligation to update this document or to otherwise notify a reader if any matter stated statement or information contained here changes or subsequently is shown to be inaccurate. Nothing contained herein constitutes any representation or warranty as to future performance of any financial instrument or company. Forward-looking statements should not be relied upon, and performance or outcomes may differ materially from what is contemplated herein. Opinions included here incorporate subjective judgments or may be based on incomplete information. This document does not constitute or contain an offer to sell or a solicitation to buy any securities or a recommendation to enter into any transaction, and no reliance should be placed on this document in making investment decisions.
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Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.
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