As funding for creator economy startups has dried up, some companies are turning to unconventional means to raise money. In March, the newsletter platform Substack raised $7.8 million in what it called a “community round,” inviting its writers to invest in the company. Now, more startups are following in its footsteps.
On Tuesday, Gigmor, which connects independent musicians with event bookers and fans, opened its crowdfunded round to the public. The round, which is hosted on the crowdfunding platform WeFunder, has already raised $170,000.
“We thought it made sense as an artist services company to open up the ability for our members to own a piece of the company,” said David Baird, the co-founder and CEO of Gigmor, which was founded in 2014 and is based in Los Angeles. The company had reached out to a few venture capitalists at the beginning of the year but “conditions weren’t optimal,” he added.
Gigmor has eight full-time employees and will use this round for business development and marketing, like hiring employees who will increase the artists and fans using the platform, Baird said. The booking and ticketing platform charges for artist subscriptions and ticketing fees and projects reaching a pace of $1 million in annual recurring revenue by next year. It’s also developing a feature for musicians called GigFunder, where fans can financially contribute to musicians’ work, like renting a recording studio.
Baird is not averse to raising money from venture capitalists. The startup raised $850,000 from angel investors in 2020 and is aiming to raise a seed round from venture investors next year, he said.
Other creator startups have also tried crowdfunding. In August, Blue Wire, which connects sports podcasters and advertisers, opened a crowdfunded round that has raised $240,000 to date. The startup plans to use the money, an extension of its 2021 Series A investment, to increase Blue Wire’s sales headcount, build technology like a creator dashboard and sign more profitable podcasters, said Kevin Jones, its founder and CEO.
The company has “ongoing” conversations with venture capitalists but is more focused on strategic investors, like media and sports companies, as well as crowdfunding. “A lot of us have product market fit but we’re not growing fast enough for venture capital,” Baird added.
Blue Wire, which was founded in 2018, makes money from selling ads to companies like Chevrolet and Discover, which it splits with podcasters. It projects $8.4 million in revenue this year, up 5% from the year before, and is “almost profitable,” Jones said. It has 20 full-time employees mostly based in New York and Los Angeles.
He expects more startup founders will test crowdfunding. “It will become a new page of the playbook.”
Here’s what else is going on…
Deals & Debuts
See The Information’s Creator Economy Database for an exclusive list of private companies and their investors.
Coatue Management cut the valuation of its stake in OpenSea, a non-fungible token marketplace, by 90% to $13 million, my colleague Kate reported. The writedown implies OpenSea is valued at just $1.4 billion on paper, down from $13.3 billion in early 2022.
Instagram said it is testing a new feature that lets users turn read receipts off in their direct messages.
Loudly, a generative artificial intelligence music platform, introduced a feature that recommends songs based on videos uploaded by users.
GFR Fund raised $53.5 million for its third fund to invest in gaming, entertainment and consumer technology, it announced Monday.
Creator Corner
Pocket.watch, a digital entertainment company, announced eight new partnerships with kids and family creators including Daniel LaBelle and Gaby and Alex.
Mythical, an entertainment studio led by YouTubers Rhett & Link, launched a breakfast cereal line called MishMash.
People on the Move
TikTok has reorganized its communications team, hiring Karen Hobson to lead its new Media Relations & Product Publicity team, my colleagues Erin and Kaya reported. Hobson was most recently senior vice president of communications, internal content and operations at Disney. TikTok’s communication chief Zenia Mucha joined in June after two decades at Disney.
Shein hired Wei “Andy” Huang to lead its fulfillment and logistics operations, my colleague Ann reported. Huang was previously the top U.S. logistics executive for ByteDance, which owns TikTok.
The Information Events
*Next Week* Thursday, November 16th—How to Regulate AI for the Creator Economy. Creators are starting to embrace artificial intelligence tools to help make their jobs easier. At the same time, the rise of AI raises questions about whether creators will be credited for their work, what disclosures around AI content should look like on social media and more. As the first piece of European regulation is set to be released later this year, we’ll discuss the impact and how to effectively regulate AI and the creator economy. Reserve your spot here.
What We’re Reading and Watching
• Are You Ready for a New Alex Cooper? (Cosmopolitan)
• How Chinese Influencers Use AI Digital Clones of Themselves to Pump Out Content (The Guardian)
• Big Tech Ditched Trust and Safety. Now Startups Are Selling It Back As a Service (Wired)
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