Tejas Hullur had been posting regularly on for about eight months before he partnered with a company for his first brand deal.

reached out to Hullur, who creates videos about ways to make money online and how creators build careers online, in April 2021 and asked for his rate. The payments giant wasn鈥檛 the first brand to contact Hullur, but it was the first partnership he wanted to do, and he was unsure of his rate. Venmo offered $1,000, and he negotiated it up to $1,500.

That deal marked a turning point: Now Hullur was not just a business, but a creator.

鈥淲hen I got word of that first brand deal that was $1,500, I was like, 鈥極h my gosh,鈥� 鈥� Hullur said. 鈥淚 was like, 鈥極K, I鈥檓 going to get this done, I鈥檓 going to continue, and I鈥檓 going to see what else comes my way.鈥� 鈥�

Hullur has amassed more than a half-million followers on TikTok, where his content offers a behind-the-scenes view of the life and career of an online creator. He formed a limited liability company, produces content for clients, teaches courses and consults for businesses. In other words, he鈥檚 a business unto himself.

Hullur is one of who consider themselves creators, and among the growing crop who successfully monetize their audiences as part of the so-called 鈥渃reator economy.鈥�

Loosely, the creator economy encapsulates the industry of people who create online content and make money off of it, independent of a third-party brand. That could mean posting dance videos on TikTok and getting sponsorship deals, reviewing beauty products on , or writing about current events for paying subscribers on .

鈥淭he beauty of this industry is there鈥檚 no textbook to it,鈥� Hullur said. 鈥淚t鈥檚 a blank canvas and it鈥檚 being built out in this moment.鈥�

VCs move in

Increasingly, venture capitalists are also backing the creator economy: not by investing in the creators themselves, typically, but rather in the fast-growing industry of services that cater to those creators, from specialized credit cards to business management tools.

Funding to venture-backed startups focused on content creators so far this year has reached $637 million, putting it on pace to surpass last year鈥檚 record by far, according to 附近上门 data. Funding to VC-backed creator economy companies in 2021 was $939 million鈥攄ouble 2020 levels.

鈥淔or the first time ever, you have people who can make a living creating this content for other people, and finding ways to support themselves too,鈥� said , co-founder of , a startup best known for its credit card for content creators. 鈥淪o I think for VCs they鈥檙e thinking, 鈥極h here鈥檚 a new business type that鈥檚 forming.鈥� And every business has to go through challenges of how do you get customers, how do you monetize customers, how do you support and scale those operations?鈥�

What is the creator economy?

The way we see it, the industry surrounding the creator economy can be loosely categorized into three buckets: the platforms, the payment tools, and the operations systems.

Platforms are typically social media companies like TikTok, YouTube or , where creators publish their content and build and reach their audiences.

Once a creator has enough of an audience, they typically start monetizing. Once you start making money, you鈥檙e a business. A crop of startups has developed payments tools specifically for people who monetize their online content. Companies in this category include and .

Lastly, there are companies that help with the operations of being a creator, like marketing and payroll. One example of that is , which focuses on the 鈥渇inances and back office of the creator economy.鈥�

鈥淥ne of the biggest pieces that was important for me to understand where we鈥檙e headed with this is that creators are the future small business,鈥� said Adams Conrad, a principal at who has invested in companies like . 鈥淎nd small business is the foundation of the U.S. economy.鈥�

Timing is key

People making money off YouTube videos or influencers landing lucrative sponsorship deals on Instagram is nothing new. But the idea of the 鈥渃reator economy鈥� as an industry that could be backed by institutional capital really gained traction among venture capitalists in 2020, when the COVID-19 pandemic hit and everyone turned online.

There wasn鈥檛 one event that got VCs to start investing in the creator economy. However, data coming out about TikTok鈥檚 engagement was certainly a factor. For Conrad personally, 鈥渢here was a striking interview around, I believe it was around kindergarten or elementary school students who were more excited to be YouTubers than astronauts.鈥�

The timing of TikTok鈥檚 popularity alongside the pandemic created a slew of new creators, and advertisers took notice too. As Hullur points out, advertisers could get more data from social media than traditional advertising, including the number of views, qualitative data from comments, and conversions from links.

In the wake of TikTok鈥檚 success, a number of other creator platforms have also formed and raised funding. Social audio app has raised $110 million since it was founded, and paved the way for some users to . Other social media platforms including , , and , which was founded by creator were also founded in the past two years and have attracted funding from VCs.

Opportunities for investment

Creator economy opportunities are tied to what creators care about the most, which is what will help them produce content.

No. 1 is, 鈥渁nything that helps you make more money,鈥� according to Wei of Karat Financial.

One of the most popular areas is content monetization, an area with a growing number of companies competing in it. Wei believes the company that comes out on top will be the one that聽 executes best to do that.

There鈥檚 also a need for tools that take other aspects of running a business off a creator鈥檚 plate. For instance running payroll, managing revenue, hiring employees, and so on. Pretty much any SaaS payment tool that a small or medium-sized business finds helpful could be replicated and tailored for creators, Conrad said.

鈥淭he best creators realize what they like to do and they (delegate) out the things they aren’t as good at,鈥� Hullur said.

Some of the companies in the space that have raised money include Karat, and .

Attention on the creator economy has typically been focused on the creators with the biggest followings. Those are people like Charli D鈥橝melio or Addison Rae who shot to fame doing dance videos on TikTok. Now they rake in millions from brand deals, partnerships, TV shows and movies.

But there鈥檚 a big opportunity for investment in tools to support what鈥檚 known as the creator 鈥渕iddle class,鈥� or people who make $50,000 or less from their content, according to Hullur.

There are micro communities on platforms like TikTok and YouTube, Hullur pointed out.

鈥淓veryone right now is trying to build for creators but creators to me are just entrepreneurs,鈥� Hullur said.

附近上门 Queries Used In This Article

Methodology

We included funding to venture-backed companies globally that were tagged under 鈥渃ontent creator鈥� in the 附近上门 database. For funding to fintech companies focused on the creator economy, we included venture-backed companies in the financial services sector that included 鈥渃reator,鈥� 鈥渋nfluencer,鈥� or 鈥渕usician鈥� in their 附近上门 descriptions. We did not include crypto companies or NFT marketplaces in this dataset.

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