YouTubers are the new Stanford dropouts.
Slow Ventures, an early-stage VC firm, launched a new $60 million fund focused on investing in content creators. It's looking for creators with the "DNA of a YC founder," Megan Lightcap, a partner leading Slow's creator fund, told Business Insider, referring to Silicon Valley startup accelerator Y Combinator.
"Everyone has looked at creators and the businesses that they're building and been like, 'Oh, it's cute. It's like a little lifestyle business,'" Lightcap said.
However, Lightcap poses that some of these businesses are venture scale.
"There's going to be a subset of creators that are very entrepreneurial, have deep trust and expertise in a specific vertical, and are builders," Lightcap said. "They're founders."
Investing in creators' businesses isn't new for Slow. The firm has been testing the model for a few years. Other companies like Jellysmack and Spotter have also offered capital to creators with a focus on licensing their content catalogs. But this is the first time Slow is setting up a dedicated fund for creator deals with participation from institutional investors like MIT and the University of Michigan.
For Slow, investing in a creator does not mean simply getting a cut of their media business built on YouTube ad revenue and brand deals. It's about getting a share in the profits of whatever spin-off businesses they launch, such as a gardening influencer selling rakes or a food creator publishing a cookbook.
The company said it will invest between $1 million and $3 million to get a 10% stake in creator holding companies. Those holding companies will house all the different business lines an influencer might dabble in.
Lightcap said the capital allows for flexibility, letting creators "test and experiment" with content and production, hiring teams, and building broader businesses.
Where Slow's money will flow
What type of creators is Slow looking for? Not a generalist like MrBeast, but rather, a content creator passionate about a specific niche who understands what products are missing from that category.
Slow's target creator sees that opportunity, knows that their audience feels similarly, and says, "'I'm going to build it,'" Lightcap said.
While some creators may be more focused on platform ad revenue or brand deals, Slow is looking for creators whose businesses are outgrowing the traditional influencer career.
"They look at the media not as the end, but as the means to an end, and think of their content and community, really, as this strategic asset on which they can launch other types of companies," she said.
Creators with a substantial YouTube business are top of mind for Slow.
"There's many ways these creators can emerge," Lightcap said. "Most of them end up in some way, shape, or form on YouTube."
Lightcap highlighted Slow's previous investment into YouTube creator Marina Mogilko's business as an example of a successful deal.
Creators as a new type of founder
Investing in a YouTuber could seem risky to a traditional VC. After all, your return leans on the performance and durability of one individual.
But Lightcap said the situation isn't much different than betting on a startup founder, who often carries the future of a company on their back for years.
She said creators can actually be much easier to conduct due diligence on than a startup that's just getting off the ground. A creator's audience, the presence of superfans, and the ways they make money are easy to vet.
"As seed investors, we're so used to looking at an opportunity with zero data," Lightcap said. "When you're looking at creators at this level, there's actually a ton of stuff to diligence."
At the end of the day, there's precedent for media figures growing niche content into big businesses, with lucrative exits.
"You don't have to squint very hard to be like, 'Would a creator holding company ever IPO?'" Lightcap said. She pointed to Martha Stewart and the Oprah Winfrey Network as examples of media players that successfully scaled. "It's not something that we're necessarily underwriting today, but it's going to be very interesting to see how this all changes."
