Creator Venture Studio
I think I need another Negroni.
Like most people my notes app on my phone is filled with ideas, some as simple as a one liner “Panda watch but interactive” others that look like a journal entry of a madman such as the one we are about to get into today.
From memory this concept came about after a few negroni’s at Shoreditch House after eavesdropping on a conversation between 2 lads trying to convince a DJ friend that web3 was the future and they should leave web2 behind - with some of the worst logic I had ever heard.
It sparked an idea of what if leading creators moved into web3 to build a community of stakeholders that would help raise a fund to build new ventures that could be marketed to their audience (web2) with the power and support of their community. With this new community profiting from each successful brand launch.
So let’s look at the concept of a creator venture studio…
Without getting too deep into the history of web2 and web3 here are some super quick breakdowns of each as a refresher.
Web2 Creator Model
The web2 era of the creator economy is built around user-generated content platforms, where creators produce and publish their creative online to audiences via platforms such as Instagram, twitter and YouTube. With a growth in audience the creator has the option to implement various monetization models across their channels, ranging from subscriptions to advertising and even brand partnerships which also allows an extension to a new audience creating further growth.
Creators are creating free content then hoping to monetize once an audience is captured, this requires upfront capital in order to produce, market and boost each drop. This cold start flywheel can instantly turn away or crush creators before they have captured their audience.
Web3 Creator Model
Now let’s take a quick look at the web3 model and how it flips the script. Web3 starts with monetization first via tokens (NFT or fungible) that attracts owners with perks and a community.
Creators are able to make capital upfront that can be then put towards their creative outputs and now have a growing community of token owners that are incentivized to help the creator succeed and end up becoming your brand ambassadors. As the creator's work becomes more recognized and the community grows, so does the token's value which opens up a secondary market for people to buy into the creator's work/community. This resale has royalties in place so the creators get a % of each sale continuing to bring in capital flow.
This model reduces the total size of the audience needed to monetize, but does require a much deeper and connected relationship with your fans.
Web3 moves your audience into a community, and this community are active stakeholders. Opening up a partnership with you are your fans to comment, vote and participate in the creator’s work. Fans for the first time are truly involved with the work and can feel a part of the story and journey which comes with some pros and cons…
This adds a large amount of responsibility on both sides where creator’s have to be more open and engaged in the community, sometimes spending long hours on twitter and discord day after day helping steer the projects. This can take away from their creative process and cause burn out not to mention you are having to answer and justify your work to active investors in your brand, on the other hand you have a connection with your fans like never before and can create work that is hyper specific and refined to their taste.
Venture Studio Model
So what is a venture studio? It’s an organization that creates startups, typically by providing the initial team, strategic direction and capital for the startup to reach product-market fit.
Simply put a venture studio is a company that builds other companies with the teams, technology, capital and network to succeed.
Not to be confused with an accelerator like YC, which provides 12 week programs and initial seed funding up to $500,000 in exchange for a set amount of equity. This program is exactly as the name suggests, it puts your product and vision in overdrive to get you ready for demo day where you present your startup to a carefully selected, invite-only audience. But YC doesn’t end on Demo Day, the YC alumni network continues to help founders for the life of their company, and beyond. Some noteworthy companies include Stripe, Instacart, Coinbase, DoorDash and OpenSea just to name a few.
As the studio is the “founder” of the startup their team need to identify new markets and opportunities, intense market research, building MVP’s, scaling and of course hiring leadership to take over or even be positioned to sell.
What would happen if we interconnected these models to create a highly successful creator venture flywheel?
Creator Venture Studio Model
So if we look at web2 as the Audience and Web3 as the community we can start to leverage each to our advantage to have our top tier fans help steer the ship while our traditional fans can enjoy the ride.
Let’s say I am a top 50 creator with 15m fans across social with an average engagement of 12% and have made $10m so far in my career.
With an average of 1,800,000 engaged fans we will first need to target this number to find our super fans and move them over to a new web3 landscape, assuming we haven’t done this already. Instead of an NFT collection of fiverr artwork with little to no meaning and random trait scarcity we need to align to what our fans are after — exclusivity and access.
Firstly our collection will be auction based to drive awareness and fan interaction with it broken down into tiers of access. We want to make sure fans across all price brackets have an opportunity to join in.
Tier 1 - 50 (10% stake)
This is the top fan tier and the most expensive that comes with VIP level access and the inclusion of all other tiers. This token can include 1:1 chats on discord, a follow on social media accounts, access to the community voting board, VIP access at all physical experiences.
Tier 2 — 500 (2.5% stake)
The middle tier will grant tier 3 access plus community challenges level up to tier 1 access, this increases engagement and gamifies the overall experience.
Tier 3 — 10,000
Access to the community
We can start with 10,550 access tokens as an entry point to our web3 journey with tier 1 + 2 coming with % stake in ownership of the venture fund.
Let’s say tier 1 tokens sell for $5,000 each ($250,000 total) and tier 2 for $1000 each (500,000 total) and tier 3 $100 each ($1,000,000 total) giving us $1,750,000 towards our first fund with 12.5% community ownership. I could also put $2m in the fund from my own capital to give us $3,750,000 to launch our creator venture studio.
Unlike a traditional venture studio we have over 10,000 active and engaged data points helping us select what products we should build as well as testing and more importantly pushing into the wider market as brand ambassadors. If we combine this with our web2 audience we have a market of 15m to funnel products into across our channels without the need for advertising, product placement and wholesale.
To take this one step further if the venture studio brought products to market then raised an external seed round the value we could bring to our community would be life changing. This would allow the opportunity to make future funds with the same model with a high buy in price once we have proof of concept and return on investment.
Of course this model makes a lot of assumptions around fans buying in, but with the success of companies like Cash App teaching the value of bitcoin and investing, today’s and more importantly tomorrows consumers come educated and see the value in long term investments and the power of communities.
I should note that I have no financial education and not in venture capital so take this with a grain of salt. I am just a designer with a passion for business but if you are from those worlds and have ideas or thoughts around this jump in the comments and let’s discuss.
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