Like many industriescreator-focused startups had an easy time attracting funding in 2020 and 2021. But venture capital investments in this category have slowed markedly since the second half of 2022: going from 42 rounds worth $336 million in Q2 2022, just 19 rounds worth $110.2 million in Q3 2022.
At the time, Roadrunner VC’s Nate O’Brien he said it best: “The creator bubble is bursting.”
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As is often the case with the most hyped sectors, they end up deflating when the market is not favourable. And the situation gets worse if you belong to a category that depends on the instability of the advertising market and is highly exposed to macroeconomic fluctuations. But more importantly, the rise of the creative economy has largely been driven by factors that have turned out to be quite temporary.
“Growth in the creator space has been fueled in two parts: by COVID and [by] the e-commerce boom (the leading advertiser in the creator economy). People have largely returned to their normal lives and e-commerce is back at its usual pace, so the slower growth of the creator space is not surprising,” Coventure partner Brian Harwitt told RockedBuzz+ in a recent investor survey.
Sure, that’s not surprising, but it still means that new startups hoping to solve creators’ problems and help them generate revenue today often find it difficult to raise money and probably even scale.
Venture capital rounds and younger startups, however, make up only part of the picture. There are many outliers to be found if you simply examine the set of companies that raised large amounts of money before the advertising market started to cool down, and chief among them is OnlyFans. It’s actually one of the best companies in the industry right now, period.
7 VCs explain why the creator economy still has legs
It is often difficult to get an accurate picture of the state of some businesses, especially late-stage startups and large private technology companies, as we usually have only incomplete or lagging data to study. With OnlyFans we have strong and complete information; it’s just dated. Thanks to data from its British parent company Fenix Internationalwe have OnlyFans results for the fiscal year ending Nov 30, 2022, which is pretty much all of calendar 2022. Huzzah!