The goal of this creator economy report is to provide founders and VCs in the space with a general framework and insights for discussing the topic. We look forward to hearing your thoughts on what you found interesting, what you think we missed, or any other viewpoints on this new Web3 consumer economy.
Now, let’s jump straight in!
‘’It will be the Web3 creators who will rebuild the global economy and take us into a beautiful, decentralized, free and trusting world. I can’t wait.’’ - Tim Draper, Founder of Draper Associates
Speedinvest fundamentally believes that Web3 is a technology that will redefine all verticals in the economy. Blockchains are already starting to operate the backends of many software applications and, as part of Web3, have more potential to influence how we interact with the internet than mobile and the cloud did.
From an economic perspective, this especially applies to how we create and transfer value online. Creators are now in the driver’s seat, being offered the opportunity to have greater control and individuality than ever before.
Bradford Stephens, Co-founder & Managing Partner at Blockchain Capital, says, “This is a movement that is coming from the people. What's exciting is this self empowerment of the individual, and that is the life-changing and major shift in humanity!”
The creator economy consists of people who, just like any of us, have a passion, or a hobby that they can monetize online. But it is platforms that allow creators to make an income from doing what they love. An example is YouTubers and TikTok’ers creating content for their fans.
This often results in limited revenue opportunities, such as merchandise, subscriptions, ad revenue or tipping which unfortunately are, in practice, only sustainable for the top 1% of creators who have amassed large followings.
To make matters worse, platforms today take too big a share of the income creators generate. For example, the typical music artist on a streaming platform earns about 10% of their entitled royalty with the rest going to the record label.
They also do not provide options for creators to be discovered through their algorithms and only a few provide direct ownership, enabling all stakeholders to profit from their contributions.
This is, we believe, where the next iteration of the category is headed towards.
Creators are no longer just the product - they are the new economies.
With the term ‘creator’ now widely recognized, the creator economy market has reached an outstanding $104.2 billion. The same research also states that one billion people will self-identify as a creator over the next five years. In fact, a staggering 29% of American high school students say they would like to become a “content creator.” And, make no mistake, in a world of niche entertainment, this is becoming an increasingly viable career choice.
Niko Bonatsos, Investor at General Catalyst, comments, ‘’The same way that Silicon Valley became a mindset and millennials from all over the world realized that tech entrepreneurship can be a career option, Gen Z’ers, for the very first time, can now earn a living from their ingenuity online.’’
Given these facts, it is no surprise that the demand for content is rising and will only continue to do so.
Consumers are increasingly moving online, pouring their attention and $$ into mobile as we head into a “mobile-first” economy. There are now over five billion internet users who spend about seven hours online each day across several social platforms - 93% of those primarily with their phones.
“Today, it’s difficult to define mainstream without decoupling it from mobile,” says Robby Yung, CEO of Animoca Brands, “so it’s arguable that, in the post-mobile world, nothing is mainstream unless it’s on mobile.”
But this growth in the creator economy is also driven by record amounts of funding pouring into the market from prominent investors - $1.3 billion in 2021 alone. This includes the likes of Andreessen Horowitz, Greylock, Bessemer, Northzone and Atomico.
Online content distributors, such as YouTube, Facebook and TikTok have also all launched their own creator funds, allowing them to directly enter the sector and also helping them to entice creators to their platforms.
Of course, this business strategy makes sense if we keep in mind that the quality of content on a platform defines the platform’s value and is directly responsible for attracting and retaining millions of users.
But despite these developments, most creators face the same problems they’ve faced for years: Creators are still not fully compensated for their efforts, making it very difficult for them to build a stable income.
But this is changing.
Platforms are becoming community-led, making it easier for both creators and their audiences to profit from their contributions.
But before we start exploring the next iteration of the creator economy through the Web3 lens, let’s take a step back and look at the historical evolution of the sector.
Web1 refers to the first, static version of the web, also called The Information Economy. The user’s role was mainly limited to reading information provided by very few content producers with no option for the users to circle back to those creators. Some examples are personal websites, AOL and CompuServe - consumption only.
Eventually, Web2 opened the opportunity for every single user to create content for the first time. But how?
As people started gravitating to the internet, Web2 saw the rise of the “influencer,” people who started blogging and gradually amassing significant fame and online audiences on platforms such as MySpace, Blogger, Soundcloud and Vinyl.
Soon these creators started monetizing their audiences, primarily through affiliate advertising and sponsorship agreements - allowing them to become channels for other brands and earn revenue in the process. However, they were just acting as conduits for these brands and businesses to reach potential customers and, therefore, usually had no real loyalty to the companies.
This led to a power imbalance between platforms and creators in Web2. Creators became reliant on platforms who were the new de facto gatekeepers of the internet.
Today, the definition of creator has been changing with the rise of Web3 as power dynamics shift from the platforms to the creators and their communities.
Harry Stebbings, Founder of The Twenty Minute VC and 20VC fund, says, "Seeing more value captured by users, both individually and collectively, is one of the most exciting aspects of Web3. It removes intermediaries from traditional Web2 aggregators and gatekeepers, which is key for the democratization of income creation in the digital world."
The creator economy is no longer just about providing value to the platforms. It’s about new forms of direct creator-community relationships. Not only does it provide the opportunity for creators to offer more to their fans (including financial upside), but also for both creators and their communities to finally be able to participate in the collective value that they help platforms create.
This is the opportunity we see for the new community-led creator platforms, their ability to create self-sustained networks and fairer ecosystems where people serve each other and the community as a whole.
This will lead to the success of the creator economy.
Jarrod Dicker, Partner at TCG, comments, "What Web3 really does is it unlocks the possibility for creators to offer more. If we take newsletters as an example, the concept in Web3 becomes 'why subscribe when you can invest?' In the case of Mirror.xyz, you now have the opportunity to invest at the earliest stages of a publication in exchange for a token or NFTs so you effectively have ownership in that.”
In this market map, we focus on the new Web3 creator platforms that not only enable creator (and community) ownership but also ensure a fairer and circular distribution of benefit to all of the contributors of the community.
In this instance, we divide the landscape in (1) companies enabling direct monetization for the creators and the (2) creator tools enabling creators to participate in this new economy.
When we look at the data, it becomes clear that the creator economy is, by far, the largest in North America. Out of 144 companies, only 18 are based in Europe. However, this doesn’t come as a surprise given the differences in the two consumer markets.
North Americans, especially in the US, are generally less risk averse than people in Europe. The American Dream promotes the idea of the US being “the land of opportunity” and a high-risk, high-reward mindset is seen as a virtue. While the validity of this perspective can be argued, nonetheless, it has consistently helped to spur innovation, with the country being at the heart of multiple tech booms and home to a relatively high percentage of early-adopter consumers.
The US also happens to be the cornerstone of the global media ecosystem and home of Web2 creator giants of the likes of Myspace, YouTube, Snapchat, etc. So it makes sense that the creator economy would take off in the US before Europe.
But times have changed.
Web3 creator economy startups are popping up all over the continent.
Take Sorare in France, which recently raised $680M, led by SoftBank Vision Fund 2, to build the next entertainment giant, starting with soccer. Ledger, also French, makes digital assets more secure with their crypto hardware wallet. Axie Infinity in Norway / Vietnam has also tapped into the play-to-earn video game trend with their monetized game using NFTs.
Businesses like these are sprouting up across Europe every week. Not only are they growing at a high pace, but they are also receiving serious investor interest and capital from both European and North American investors.
“The idea of an everyday person earning a consistent income from making YouTube videos is no longer a laughable daydream - it’s a proven business model,” says Paola Vivoli, Investor at Speedinvest, “This has already started to attract the attention of B2B startup founders and investors in Europe. They can now clearly see which way the wind is blowing when it comes to the creator economy and they want in. With that in mind, we expect the European ecosystem to continue to grow. It just has a little catch up work to do to reach the same level of maturity as our friends across the pond.”
If we look at the European Web3 creator companies and tools in our mapping, broken down into their respective categories, we have identified the below companies:
Check out the entire list below, including information about their category, stage and location.
The aim of this list is neither to be exhaustive nor to rank startups, but rather to chart the rapidly evolving and expanding creator economy startup ecosystem.
‘’The new creator economy encompasses everything creators have always craved - ownership and community led platforms where all community members are compensated for their time and contributions. Being a creator is enormously hard. However, we believe everyone will be a creator eventually in some capacity,” says Ollie Forsyth, Global Community Manager at Antler.
He continues, “We are so excited to see how the space evolves over the next few years in all aspects from gaming companies where you no longer need to buy multiple avatars in games. You can just have a handful that can be played on multiple platforms. Community tokens - that are issued based on our contributions - may just enable many of us to have an additional means of income in the future - creating a new generation of wealth.’’
If your company is not on the map and you’d like to be included, just write me on twitter @VivoliPaola and we’ll add you!
The criteria for how we selected and sorted startups is as follows:
We focused on startups that are already generally established in the space, meaning they are already funded or are publicly fundraising. We exclude very large mainstream companies - like Patreon, Snapchat, etc. - as our goal is to focus on and support the startup market.
Our primary sources of data were Crunchbase and Pitchbook, supplemented by our own deal flow, as well as conversations with investors from other VCs.
Now, for founders who are looking to build these new creator platforms, information on what investors are looking for and tips for how to ace their fundraise can be scattered, inconsistent and overwhelming.
For this reason, we decided to ask a few investors for their thoughts on what they pay attention to when analyzing potential investments in the space.
Investors look for volumes at launch (transaction volume and trade volume, payments volume, search volume, developer activity, # of wallets transacting on-chain, # of mints, etc.).
To understand what kind of liquidity there is in the market, it is particularly important to consider the exchange trade volume. A tool founders can use to monitor the activity includes Nansen - where you can see, in real time, which projects are taking off. While tools like Moby and Icy.tools may be used to track specific NFT projects.
Examples of metrics to quantify the quality of the engagement and health of a network are:
Daily or Monthly Active Users
Monthly Active Wallets: Unique users with active token wallets last month
Total Number of Addresses, Addresses With Balance, Zero Balance, Zero Balance Ratio: This data indicates the lifetime population of users and the protocol’s retention. Zero balance addresses are those that have transferred out all their tokens. Zero balance addresses / total addresses = Zero balance ratio.
Often people are holding crypto but not transacting with it (however, a crypto game token or community platform should have higher activity rates and transaction counts) so this number should be significantly larger than the daily average of users
Remember, 80% of users might just be lurkers.
Silvia Oviedo Lopez, Head of Marketplace at Canva, says, “I think that the community angle is going to be the most interesting [part] over the next little while and really brings a new lens to the creator economy. There’s a lot to figure out - but access, inclusion, and awareness feel like important next steps. I’m excited to see how things shape up!”
The way we see it, Web3 startups should not only be able to attract and grow their existing audience by constantly engaging with it, but also be able to appeal and reach new audiences, particularly in new markets.
As an example, if we take a blockchain-based game, founders should think if the game is designed and built for gamers only or if they can go beyond that and design it in such a way that third-party developers are incentivized to build on the platform.
Utility NFTs or NFTs 2.0 are NFTs with valuations that are based on the access, perks, and opportunities they provide to the token holder. They have clearly defined intrinsic value on top of the usual scarcity associated with NFTs and are broadly classified into the following categories: community, fantasy sports, gambling, gaming and social. Based on user demand, utility NFTs are believed to be the future and, therefore, founders need to understand how to best design them.
If we take blockchain-based games and in-game NFTs as an example, game developers in Web3 not only have to worry about building a good game, but also about creating good enough financial incentives to support a robust and sustainable in-game economy. Is the gameplay captivating? Does the in-game mechanics make sense, and are the NFTs functional (as opposed to collectibles)? The game has to be really good after all!
Sasha Kaletsky, Co-Founder of Creator Collective Capital, says, “In addition, today, some of the most successful NFT-based games (e.g., Axie Infinity, Sorare) have a strong “pay-to-win” element, which is culturally quite out of sync with the Western “free-to-play” culture of recent years”
What’s more, for creator social tokens and NFTs, tokenomics should be structured such to create a sustainable economy (e.g. current debates around “rich-poor” divides in Web3 gaming), which is crucial for long-term creator adoption.
“Social tokens are usually a small slice of a creator’s primary source of income, so creators tend to be very downside-focused in how they look at monetising their fans via Web3. Nobody wants angry fans who’ve lost money blowing up their comments (it’s happened before…)!” adds Sasha.
While in Web2 the primary GTM stakeholder is the customer. In Web3, the alignment of incentives through stakeholder primacy means that the entire community of contributors making up a network are turned into stakeholders - driving the need for new distribution strategies.
The opportunity in Web3 is to leverage tokens and the underlying decentralized tech to build and bootstrap these new networks.
Therefore, what this means in practice is that, while Web2 businesses’ GTM strategies start with the product (i.e. come for the tool), Web3 companies should have more of a bottom-up approach and design the tokenomics to reach and attract an engaged community. That’s what investors would want to see.
To this point, it is important that founders tailor their GTM strategy to the community they are building for. Investors would want to check that founders have a sufficiently good understanding of their (future) community, as well as of where the company sits in the Web3 landscape, and thereafter are able to define the ideal toolbox of Web2:Web3 strategies (e.g. a mix of push marketing versus collaborations).
Coming soon: Diving deeper into Go-to-Market Tactics and Strategies in Web3 #watchthespace
Today, investors typically believe / expect 'crypto-native’ teams to have a better position to build and win in this space over teams building social / consumer/ game-first startups. However, evaluating a team that builds in Web3 is not so straightforward. The most ‘crypto-native’ founders are not necessarily the right ones to build some of these new creator solutions which, depending on where you sit on the landscape, actually mostly resemble consumer apps.
In this instance, investors would probably like to see founders who are “native enough” to understand crypto and Web3 with a lot of depth and nuances, who have the right network to attract crypto engineers, but who also so native that they can’t understand the experience of the average mainstream, non-crypto user they might be talking to.
2021 was a pivotal year for the sector as Web3 took all sectors by storm. It is a truly horizontal trend investors are paying close attention to across the board.
What we are seeing today is an incredible combination of talent and capital flowing into the ecosystem, further fuelling innovation in the decentralized technology stack, as well as consumer-facing applications that are now disrupting all ecosystems. This can be seen by the big rounds raised by companies including:
Web3 is attracting more and more attention… but from who? We’ve reached out to the wider ecosystem to provide you with a clearer overview of who is investing in this space, including their stage, geography focus and cheque sizes.
As new opportunities continue to arise and all eyes turn to the space, we asked a few investors what they are most excited about, as well as where they see the biggest opportunities unfolding in Web3 - here are their answers.
The financialization of everything. “Web3 is enabling the financialization of everything, with the theme of ownership at its core. Any asset can now be (A) Tokenized and (B) You can create business models where the tokens become the reason why somebody invests into that creator / asset / platform. So it is becoming an investment decision. Furthermore, it’s not just that anything is becoming investable, but also how we spend our time is becoming an investment decision. You can now earn money by playing a game (e.g., Axie Infinity, Sorare) and, by doing so, you are now making a decision with your time. You are incentivizing people through asset ownership as a way where they can actually build income, be part of a community and bring others to that community.”
No part of the economy will be left untouched. “Speedinvest fundamentally believes that Web3 is a technology that will redefine all verticals in the economy. Blockchains are already starting to operate the backends of many software applications and, as part of Web3, have more potential to influence how we interact with the internet than mobile and the cloud did.”
New tools bridging Web2 engagement with Web3 loyalty. ‘’Overall, stronger loyalty. Creators will have the ability to reward their most loyal fans through continuous engagement where it's not necessarily tied to $$$. I'd be interested to see tools emerge that help bridge Web2 engagement with Web3 loyalty - being able to retroactively determine your biggest fans by attendance at your events / concerts, spend on your merch stores, engagement on socials - that can kickstart tiered loyalty on newer Web3 platforms. That way you're not starting from scratch with your fanbase, and can reward folks who have been with you from Day 1.’’
The lifecycle of a creator. “I'm excited about three main segments: 1) creative tooling, 2) creator discovery, and 3) creator monetization. I think of these as the lifecycle of the creator. In the first bucket are technologies that unlock new forms of expression — I'm excited by VR, AR, and low-code / no-code creation tools. In the second bucket are ways that people find an audience online; the best technologies enable better community formation. And the last bucket contains ways that creators can make money. We're seeing NFTs, social tokens, and other new Web3 innovations reinvent monetization.”
Creator longevity. ‘’I am most excited about platforms that enable creators to create meaningful engagement with their audience without having to be on an endless content hamster wheel. As a creator's audience grows, their insatiable appetite for content from the creator can become a life consuming endeavor. Platforms that enable creators to ‘monetize while they sleep’ is something I would love to see.’’
Redistribution of wealth and optimization & security of data. “In Web3, the opportunities I am most excited about are (1) The redistribution of wealth through things like play-to-earn games and tokenomics applied to real use cases, (2) The optimization of data and information flow and (3) Making information tamper proof and more secure.”
Experimenting with the fungibility of a token, as a distribution mechanism, is where new ideas flourish. “So much of the current disruption within this new creator economy is in the distribution mechanism where you create and capture value and then redirect it to the core community, your earliest supporters, in acknowledgement of the value that they provide. The fungibility of a token, as a distribution mechanism, is the disruptive aspect luring in new founders and creators and exactly how they experiment with this distribution and add additional utility layers is what excites me most as this is where original ideas flourish."
The Metaverse. “Within the creator world, I am most excited about the metaverse direction we are all walking towards. Web3 is a mash up of 3D worlds, social gaming, NFTs, and virtual goods ownership. It stands for community, brand and ownership.”
Finally, we turned to the main actors in this new iteration of the space and asked a few creators what they are most excited about and what challenges they may face in the future - and here are their answers:
Deeper and longer-lasting relationships - across platforms. “As well as the greater potential for monetisation, community ownership gives creators the opportunity to bring their audience across platforms and protocols, allowing for deeper and longer-lasting relationships.”
A multifaceted offering of opportunities. ‘’The creator economy stands at an inflexion point, as content creators are moving beyond simply working with brands and evolving their businesses by adding numerous revenue streams. As a result, platforms are moving fast to build an increasingly multifaceted offering of opportunities. In turn, creators are leveraging these new tools to connect directly with fans and build their own communities. A byproduct of this is the emergence of various content formats - both long and short-form video; spontaneous moments captured with the camera; performative content; interactive events, or vlog-style, and creators are even making their own AR.’’
Lower barriers to entry. ‘’New technologies are just breaking down the barriers to entry which can only be an exciting thing. To build a huge YouTube channel now, you can do it from your smartphone. It's a cliched thing to say but it is 100% true. This same technology makes content creation a very meritocratic system and that is exciting for everybody. We are now seeing a fight between the platforms as to who can pay their creators the best. That is where the eyeballs are - wherever the creators are and so as a creator it's a very exciting time!’’
Adoption hurdle. “When I speak with creators, I think there's going to be an adoption hurdle. Web3 is something some creators are aware of, but few know exactly where and how to take action and what it actually means for them.”
A long way to go for the middle class of creators. “There is still a long way to go for the growing “middle class” of creators – the top echelon of creators is earning the majority of the revenue generated in the creator economy. However, as platforms improve discovery and creators become more accustomed to owning their financial relationships with fans, the middle class of creators are set to be rewarded as well.”
Sustainability and longevity. ‘’Sustainability and longevity are another huge pain point. 77% of creators rely on brand deals for the majority of their income, but brand deals can vary month to month. Partnerships are great income, but creators should be thinking about long term success. We are seeing a lot more creators tapping into NFT, subscription community, and building brands to increase income streams.’’
Creator burnout. ‘’Finding the balance of producing really good content that we love and making an income is really hard as we need to pay the bills. This sometimes leads to creators working insanely hard for not a huge amount of upside - it is important we take care of ourselves.’’
As we look into the new direct creator-to-follower relationships and at the future of the creator economy, we could not be more excited about the new ‘native’ ways in which creators can earn an income, funded by and together with their communities, in what we believe to be the emergence of new and more sustainable economies.
Danielle Lay, Investor at NEA, says, "Creators can move from fee based compensation to building wealth through equity in the communities they build. Web3 enables creators to be finally compensated like the entrepreneurs they are. For the equity to sustain value for both the creators and their communities, platforms will need to help creators design tokenomics. We can look to monetary policy to understand how tokens need to be managed. In order for a currency to store value, people need to trust it, inflation needs to be watched, and the goods / services that a consumer can receive in exchange for the currency needs to be valuable to the user."
The new creator economy will not only change the way in which content is created, but also unlock a world of entirely new tech and monetization opportunities that were simply not possible with Web2.
We are excited about the untapped potential of the new Web3 creator platforms and creators tools that enable these new direct creator-community relationships and that are built for the mainstream consumer, unlocking the next 100 million users in Web3.
“Our focus goes to the opportunity at the intersection of consumer and crypto. Unlocking the market for the mainstream user and bringing the masses to Web3 is one of the most exciting investment opportunities of our time,” says Paola Vivoli, Investor at Speedinvest.
Thank you for reading our piece and we hope you have enjoyed it. We remain incredibly excited about how the future of the internet evolves and we remain deeply passionate about supporting the next generation of platforms.
Special thanks for contributions from:
Caspar Lee (Creator, Influencer.com, Creator Collective Capital), Blake Michael (Creator), Bremner Morris (Rally.io), Sarah Nöckel (Northzone, Femstreet), Niko Bonatsos (General Catalyst), Sasha Kaletsky (Creator Collective Capital), Jim Shepherd (Snapchat), Max Fosh (YouTube Creator), Rex Woodbury (Index Ventures), Nicole Quinn (Lightspeed Ventures), Tim Draper (Draper Associates), Sandy Lin (TikTok Creator), Meagan Loyst (Lerer Hippeau), Ann Miura-Ko (Floodgate Ventures), Danielle Lay (NEA), Michael Sidgmore (Broadhaven Ventures), Kieran Hill (20VC), Harry Stebbings (20VC), Sameer Singh (Network effects Advisor and Atomico Angel), Mattia Mrvosevic (Eterna Capital), Jarrod Dicker (TCG), Brandon Potts (Framework Ventures), Robby Yung (Animoca Brands), Bradford Stephens (Blockchain Capital), Courtney Chow (Battery Ventures), Jade Darmawangsa (Creator), Dominik Tobshall (Speedinvest), Sam Nasser Zare (SoftBank)