Ugh. Venture Capital Is Funding Creators Now

Out of the frying pan, into the frying pan!

When I first saw the headline of this article, Creators raising venture capital: Unsettling or genius?, first I threw up a little, then I thought to myself: “Of course it’s unsettling. It’s a sign of the freaking end times.”

I dove into the article for a rage-read that would at least give me some feeling of moral superiority — to soothe the fact that there’s yet another reason for people to hate technology and entrepreneurship.

I mean, we haven’t even gotten rid of all the influencers yet.

So it was weird when I found myself starting to agree with the “VC-for-your-soul” concept.

OK, Well, Why WOULDN’T VCs Fund Creators?

Because yeah, there’s definitely ROI there to be had. I guess.

The well-written article notes instances of VCs “…underwrit(ing) YouTubers’ back catalog in exchange for upfront cash” and “…fund(ing) a creator in exchange for a cut of revenue over a set term.”

That’s all fine and good. Sounds great actually. Private money coming in to fill a need — funding an actual purpose for valuable content that isn’t brand-adjacent.

But then I also read that in one deal, one creator will “…give the venture firm 5% of her earnings for 30 years — plus, they keep that 5% stake in any IP she develops within those three decades.”

Oh no. That’s bad. Like, on a lot of levels. That leads me to believe that as creator revenue channels keep evolving from platform ad sales to direct sponsorships to direct outside investment to direct venture investment, the same kinds of problems that have crept into the VC-for-startups ecosystem will creep into the VC–for-souls ecosystem.

Then I read a direct quote from one of the VC principals: “Honestly, with any seed-stage investment, it’s risky.”

Woof. Seed-stage investment. In a person. Yeah, that’s where this is headed, all right. Thus, it’s something I think has a lot of promise on paper, but is going to be abused sooner rather than later. Because of unintended-but-already-visible-consequences.