The State of the Creator Economy: Insights from VCs on Trends, Investments, and the Future

Exploring the Current State of the Creator Economy Industry

The White House is briefing TikTokers about the war in Ukraine. A Twitch streamer’s PS5 giveaway sparks a bonafide riot. A 25-year-old YouTuber from North Carolina is one of Time Magazine’s 100 most influential people in the world.

If you underestimate the power of internet personalities, you’re not paying attention.

In Silicon Valley, “creator economy” used to be nearly as hot a buzzword as “AI” is right now. But even as content creators remain at the forefront of culture, the numbers behind venture capital investments tell a different story: Last year, the amount of money invested in creator economy companies dropped around 68% from the first to third quarter.

But creator economy investors remain unphased by what may seem like a steep decline. Several investors told AsumeTech+ that they knew that the entertainment industry would weather some twists and turns as the world exits pandemic-era lockdowns, and that trends in venture can be cyclical. Some investors even said that the creator economy has yet to reach full maturity.

To learn more about the state of the creator economy industry and how investors are thinking, we surveyed seven VCs about where the industry is headed, the rise of short form video, the shifting role of influencer marketing, and what the launch of new platforms portends.

Key Players in the Creator Economy Industry

• Brian Harwitt, partner, Coventure
• Sasha Kaletsky, co-founder and managing partner, Creator Ventures
• Julia Maltby, principal, Flybridge
• Josh Constine, principal investor, SignalFire
• Katelin Holloway, founding partner, 776
• Ali Hamed, co-founder and general partner, Crossbeam Venture Partners
• Sima Gandhi, founder of Creative Juice; investor and advisor at G3

Brian Harwitt, partner, Coventure

Implications of Accelerated Launch of New Twitter Competitors on Creator Success

Harwitt believes that the accelerated launch of new Twitter competitors is a boon for creators. Increased competition among platforms will lead to a greater focus on attracting and retaining creators, resulting in more monetization opportunities and potential bidding wars. This has already been observed with platforms like Kick and Twitch.

The Slowdown in Venture Funding and the Future of the Creator Economy

Despite the recent slowdown in venture funding for the creator economy, Harwitt remains optimistic. He explains that the growth in the creator space was largely fueled by the COVID-19 pandemic and the boom in e-commerce. As the world returns to normalcy, the slower growth is to be expected. However, significant growth is still expected in the next few years, and the market has yet to reach maturity.

Harwitt also highlights that access to capital and predictable monetization are important factors for the success of creator economy companies. He anticipates that companies providing such opportunities will continue to attract investments from both debt and equity investors.

Platform-Creator Economics and the Future of Short-Form Video

When it comes to sharing ad revenue from short-form video, Harwitt suggests that YouTube’s 55%-45% model is a good example for other platforms to follow. However, the actual economic split will depend on competition and scale among the platforms. The introduction of new competitors like Kick has already forced Twitch to improve its payouts, ultimately benefiting creators who seek the best monetization opportunities.

Protecting Creators and Overlooked Trends

Harwitt notes that companies interested in protecting creators are more likely to merge or sell rather than shutting down completely, which can be a better outcome for their investors and customers. He emphasizes that access to capital and predictable monetization are the key foundations of a stable and mature creator economy industry, which are often overlooked trends.

Expectations for the Future of the Creator Economy

Looking ahead, Harwitt believes that a more confident creator economy will emerge in 2024. With brands regaining confidence in ad budgets, capital markets stabilizing, and the economy improving, the digital economy is expected to be better for creators and creator-focused startups. However, the next six months will be crucial in determining the state of consumer demand for creator products.

Sasha Kaletsky, co-founder and managing partner, Creator Ventures

The Role of Twitter Competitors in Creator Success

According to Kaletsky, Twitter is largely irrelevant to most creators as word-based platforms are difficult to monetize effectively. Instead, platforms like Twitter serve as tools to amplify messages rather than generate substantial income or engage audiences.

Stay Informed and Stay Ahead

Keeping up with the creator economy and its evolving trends is key in understanding the potential for growth and investment opportunities. While the venture funding landscape may be changing, the future remains promising for creators, with new platforms, monetization strategies, and business models continuously emerging.