The Creator Economy

The term the “creator economy” has been floating around for quite some time. It’s basically the idea that regular people and small companies can use a suite of free platforms, such as YouTube, to produce content, grow an audience, and create a business.

In some regards this creates a virtuous cycle. Platforms like YouTube want to be the destination for you to find and consume content. Quality content that is useful and engaging for viewers will not only be seen, but also recommended by the platforms. As creators become more successful, they are incentivized to create more quality content to grow their reach and their revenue.

Substack & Their Equity Crowdfunding Campaign

YouTube is just one example of the ways that regular people are starting side hustles and entire businesses creating content and monetizing their knowledge, skills, and experience.

There are many other tools and platforms available for this, oftentimes with different angles for appealing to creators. In addition to YouTube, Medium and Substack are some of the most popular and simple places to start producing content, building a following, and monetizing subscribers.

Their ease-of-use and zero startup costs makes these platforms some of the first stops for anyone looking to get started in the creator economy. In particular, Substack has developed a rich feature set that enables you to create free and paid subscription services around posts, podcasts, and video content.

Today, the company announced they were testing the waters on an Equity Crowdfunding campaign on Wefunder. Interest has been intense to say the least.

Within a few hours they already had more than $1M in reservations, over 50% of their original $2M target. This encouraged them to increase the amount of funds they were looking to raise to $5M. In the roughly 8 hours after the announcement went out on Twitter, Substack had already reached $4M in total reservations.

If you are interested, Substack is raising funds at a $585M pre-money valuation. In the campaign they provide some context for their business. They earn revenue from taking relatively minimal fees from creators on the platform – 10% for themselves and 4% for payment fees. As of Q1 2023, they report having about 35M active subscriptions on the platform, over 15K writers earning money from subscribers, and about $300M in total payouts going to creators.

Conclusion

Before closing, we should think about the significance of this all.

The rise of the creator economy has been an ongoing trend for years now. Platforms like YouTube have been able to ride this wave into billions of dollars of revenue. Major elite venture capital firms have happily poured millions of investment dollars into this space.

Substack, one of the faces of the creator economy, itself received $65M of funding in their Series B led by Andreessen Horowitz in 2021.

It’s pretty amazing that we now live in a world where everyday, average people can also invest in these types of private companies and mega trends for as little as $100.

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