The Creator Alternative to VC Funding 💰

Gumroad offers to buy 10% of creator-led businesses

Good morning. Indonesian government officials are turning to TikTok and YouTube creators to film videos of the country’s new capital city, Nusantara—and sell citizens on moving away from Jakarta (the current capital, which is overcrowded and sinking). “The goal is to increase the public’s knowledge, as well as to create a positive attitude towards moving,” one official explained in a briefing, according to Rest of World. File under: new ways creators’ specific skill sets are being put to use.

Gumroad’s Creator Investing Play, Unpacked

Ecommerce platform Gumroad encourages and supports creators to start small with digital products to launch their careers / Gumroad

When it comes to funding their businesses, creators have a few options: bootstrap, crowdfund, pursue venture capital. 

Gumroad, an ecommerce company that helps creators sell digital goods like courses and templates to their fans, is offering an alternative: The company is now buying portions of creator-led businesses with no expectation of equity in return.

How it works: Gumroad will buy a 10% stake in a creator-led company, with checks ranging from $100K to $500K. Unlike venture capital, Gumroad’s funding will go directly to the creator (not the business entity) and Gumroad will receive regular dividends on the business’s earnings (instead of the typical payout in the event the business gets sold or goes public).

“By investing in the creator directly, rather than the business entity, we keep things simple and let the creator maintain full control. Dividends instead of equity also keeps incentives aligned around sustainability and revenue growth, not an exit or liquidity event,” Gumroad founder Sahil Lavingia told us.

Gumroad’s creator play: Lavingia said creators have a competitive advantage thanks to their deep audience connection, ability to adapt quickly, and authenticity as founders and business leaders.

“This initiative came from countless conversations with creators who needed growth capital but didn't want the strings that come with traditional VC or debt,” Lavingia said. “We realized there was an opportunity to better align with creators' actual needs and goals.”

Looking ahead: Despite the influx of creator-led startups in recent years, there’s still not a clear blueprint for creators to scale their businesses while keeping their (very vital) brand intact. 

“Things like hiring a team, managing expenses, balancing growth with creativity—it's uncharted territory in a lot of ways,” Lavingia said. “But I'm optimistic that more creators sharing lessons learned and new models like what we're exploring at Gumroad can start to light the path forward.”

MrBeast Splits From Management Company

MrBeast (left) separates his brand partnerships strategy from Night Media, which was founded by his manager Reed Duchscher (right) / Photography by Jesse Leon, Colin & Samir

Jimmy Donaldson (aka MrBeast) has parted ways with Night Media, the talent management company started by Donaldson’s longtime manager, Reed Duchscher.

What it means: Night will continue to play a role at Donaldson’s Feastables snack company, which it helped launch in 2022, Duchscher told Bloomberg on Monday.

Separately, MrBeast will build an “internal team” to handle brand partnerships moving forward, Donaldson said in a statement. Night had represented MrBeast in this capacity since 2018.

Zoom in: Night has grown its roster from 10 creators in 2020 to at least 65 today, bolstered by its acquisition of boutique talent firm LFM (which brought clients including Twitch streamer Kai Cenat to Night) in 2023.

“From top to bottom…our roster is well-diversified,” Duchscher shared on The Colin and Samir Show in 2022. “We’re in almost every single content niche now, from food with Guga [Foods] and Matt Stonie all the way to life and beauty with Safiya Nygaard.”

Looking ahead: Night is increasingly competing with top Hollywood talent management firms such as UTA and WME—both of which are focusing more and more on signing popular creators to representation deals.

TikTok Sues the U.S. Government

TikTok and ByteDance sue the federal government following action to ban the app in the U.S. / Illustration by Moy Zhong

TikTok and its Chinese parent company, ByteDance, sued the federal government yesterday, claiming that a new law that forces ByteDance to sell TikTok (or face a ban in the U.S.) violates the First Amendment right to free speech.

“For the first time in history, Congress has enacted a law that…bars every American from participating in a unique online community with more than one billion people worldwide,” TikTok wrote in its petition to the D.C. Circuit Court of Appeals.

What’s next: TikTok asked the court to issue an order that would stop the federal government from enforcing the law—allowing the platform to continue operating (for now).

After that, it’s up to the government to defend the law in court. The legal battle is expected to reach the Supreme Court, according to The New York Times.

🔥 Press Worthy

  • Issa Rae launches an entertainment studio with a mission “to bring more equity to the creator economy.”

  • Substack opens up a fellowship for video creators with the help of Adam Faze.

  • Ali Abdaal shares his biggest failure so far.

  • From YouTube to TikTok, Fiverr empowers creators through its Creator Program, offering tailored brand deals to all creators.*

  • Gaming streamer Mizkif is starting a podcast.

  • YouTube creators are making “life-changing money” by reacting to Drake and Kendrick Lamar’s recent diss tracks.

  • Kai Cenat won’t be prosecuted for his New York City giveaway that ended in a riot last summer.

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