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I am a creator and a founder, my journey started when I quit my job in Jan 2020 after 14 years of working as a technology and management consultant.
To be honest, I started as a founder or entrepreneur, I had an idea, I got selected in a startup accelerator and I thought I am on the right path.
While as I was validating the idea and incorporating the company I was told my primary focus should be to raise funding.
For raising funds you need to show traction and that normally comes by creating a website, developing the solution, and building an audience.
When you are bootstrapping the only and best option you have is to become a creator first. So, I did.
In this article, I discuss in detail the creator economy and the emerging new wave of entrepreneurship along with the problems associated with fundraising and how we can solve it.
What is the Creator economy?
The general definition of the Creator economy is that it is the economy that is built around creativity and content. It's an economy that is based on the idea that people can create and share content to make money.
This can include things like blogging, making videos, or writing books. You can also make money by promoting other people's content, or by selling related products or services.
Going by the same definition the creator economy consists of three major parts: the Creators, the Advertisers, and the Consumers.
I want to tell you that the above definition does not even cover 5% of what the creator economy is or is going to become in just 5 to 10 years from now.
Let's have a look at the creator economy evolution to understand the concept.
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Evolution of creator economy
Before 2010, people who were artists, songwriters, musicians, and authors were considered as creators, they had an audience, they made money, they floated brands and companies but no one thought of calling it an economy in itself.
Between the years 2010 and 2020, people started creating various types of internet-hosted content such as ebooks, blogs, and videos, and only towards the end of 2020, with the growing number of people sometimes also referred to as influencers and their income prompted the word creator economy.
Beyond 2020, is where things get interesting. The world is going towards freelancing faster than thought earlier, which is driven by the blockchain phenomena of decentralization and democratization and fast-tracked by COVID as well.
What it means is that people would want to work for themselves also referred to as the gig economy, it is estimated by 2030 freelancers could grow to 50% of the total workforce.
In essence, a good percentage of freelancers can be categorized as creators, they write code, develop new processes, solutions and games, they will also create content to find their clients and audience.
‘I am not a businessman, I am a business, man!’ — Jay-Z
These people along with current creators will know the problems which need to be solved, they will have the audience already and if they want to become founders the only thing that stops them is funding.
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The trends of the creator economy
It's already a category of businesses created by more than 50 million amateurs and professional content creators, curators, and community builders like social media influencers, bloggers, and videographers, as well as the software and finance tools designed to assist them with expansion and monetization.
Since the late 2000s, there have been numerous platforms launched, including YouTube, Twitter, Instagram, Spotify, and Snapchat. More recently came Medium, Twitch, TikTok, Discord, etc.
Since the advent of decentralized technologies and no code movement, creators are moving their audience away from big platforms and onto their own websites and apps.
Traditionally creators have been using platforms like YouTube, Instagram, Patreon, and others to make money through advertising revenue shares, sponsored content, tipping, paid subscriptions, merchandise, etc.
Now, creators are becoming founders and focusing on building out teams and put together tools to assist them to start companies.
As the audience and followers observe creators pursuing their passions full-time, they begin to desire what they have. Leading to growth in audience and their power in the media to sales of goods and services.
Creators are the knowledge entrepreneurs
Creators can become full-fledged businesses with numerous revenue streams beyond just ad income by building an audience and fans that will follow them off-platform.
As Emad Kazi, VP of Product, Kajabi puts it, "Once just “content creators,” the most successful of these innovators have been able to expand their brands and discover new ways to monetize their knowledge. Over the years, I’ve watched the growth of the creator economy and seen the positive effects of creators cultivating their brand to become knowledge entrepreneurs."
There are a plethora of companies that have sprouted up to assist creators monetize their work by selling goods, services, and even launching their own companies.
As a result, creators are free to focus on pleasing their devoted followers and producing more distinctive niche products to solve their problems.
These creative and knowledge entrepreneurs, know the problem, have an audience and now with hundreds of companies serving them to launch fast, they are poised to be the most potent founders and entrepreneurs of the future.
As per Stephanie Zhan of Sequoia, top creators bring the following to the table as founders:
- Direct distribution to millions of fans
- Direct emotional connection to their consumers
- Ability to involve their audience in co-creating a brand
Story of a creative entrepreneur
Let's have a look at AJ, he built Carrd, a single-page site builder in 2013 and bootstrapped it to over $1 million ARR in five years.
AJ was a web creator for years, and he sold website templates and themes. AJ also offered these templates under the Creative Commons license for free.
Soon, fans and others began asking for paid templates. This was a clear indication of a demand!
He first launched Pixelarity, sold set of responsive templates for $19/lifetime price. All his projects helped him build and grow audience on Twitter.
At this time, AJ took the path of being a founder and built Carrd in 2015, launched it on Twitter in 2016 and getting its first 100 users in a day.
Having a proven concept and an existing audience for Carrd allowed him to establish the market in a highly competitive market dominated by players like Wix and Squarespace.
As we go deep into this decade we will see more and more of such creators becoming successful founders.
How do creators find funding?
The primary method most creators get funding is through the usage of leftovers from their monetization. Achieving monetization is also a growing field and lot of innovation is bound to happen in the next few years.
Some content creators even make their financial situation public, and share revenue generated through ads, views or merch sales. Some use Patreon where users can pay or pledge to make a monthly payment to the creator.
Their are tools that allow creators to monetize their own work more directly by selling courses and content such as Ko-fi, Gumroad, and Teachable.
Beyond monetization creators have only few other ways to accelerate their entrepreneurship journey.
Crowdfunding is a good way to raise funds, for example, platforms like Kickstarter or Indiegogo are popular sources of funding but they are focused on physical items.
The new wave of web 3.0 will also allow creators to bring diversity to their revenue streams and get directly funded by their fans.
There are certain new platforms and funds, mostly created by creators themselves or companies building products for creators, such as,
There is a huge gap here though, if these creators want to jump into entrepreneurship, they have to start the whole process from the beginning just like a founder.
Creators will have to validate their idea again, prove their business model and in most cases shell out equity to raise funds. While loosing months of time, doing this process.
This is unfair to those, who already have a strong audience, knows their pain and is capable to sell solutions.
Even for AJ from the story on creative entrepreneur above, Carrd's rapid expansion brought new challenges. AJ realized he required assistance for infrastructure, content moderation, support, and development.
He was able to take advantage of his networking and relationships to raise money but for most creators this is not the case, as it may take years to establish such networks.
Many fundraising platforms are being launched to cater to founders of tomorrow, such as, Pipe which launched in 2020 and crossed $2B in valuation within a year, they claim to bring a new asset class i.e. recurring revenue contracts to investors.
Though the problem is that, most or all of these platforms are neglecting the new wave of entrepreneurs i.e. creators and mostly focus on established companies and accredited investors only.
How to help creators raise funds and fast?
Creators generally have many verifiable data points, which can be used to determine their current worth and future potential.
The creative entrepreneurs in addition to verifiable data points, also have some sort of recurring revenue or progressive sales over a period of time.
Combining all of the data points and existing revenue, we can determine very quickly if they are funding worthy and the maximum amount they can draw from investments.
Unlike equity, which is a high risk for investors and generally a big loss to founders, we can allow creative founders to pre-sell a limited number of pre-determined tokens based on discounted selling prices to investors and their fans.
Creators can then create a continuous funding cycle to grow and scale their business and return investors and their fans when they sell actual products to end consumers.
Now this would be a entirely new asset class for investors but would also let fans of creators to participate in such fundings.
At Presailor, I along with my co-founders want to give everyone the chance to be successful, not just established startups and founders.
Creators would be able to start continuous funding cycle on our platform just my connecting all their data points. After a short approval cycle, their campaigns would be live for any investor or their fans to participate in.
It would be the fastest and easiest process to raise money for any creative entrepreneur.
Summary
Creators, who are a part of the new wave of entrepreneurship, have a difficult time raising money for their businesses. This is because traditional fundraising platforms are geared towards established companies.
There is a new wave of platforms for funding, but these platforms require the creators to validate their ideas and business models, which takes time and resources.
Presailor is looking to change this by allowing creators to raise money quickly and easily by just connecting their data points. Creating an even playing field where everybody has the same access to fundraising.
