(2021-11-18) Owens Should Creators Accept Vc Investment

Simon Owens: Should creators accept VC investment? Back in early September, I published a piece titled “The gritty reality for Substack’s middle class.” (2021-09-01-OwensTheGrittyRealityForSubstacksMiddleClass) It was my attempt to push back against the case studies that dominate Creator Economy media coverage.

There’s this romantic notion that creators can run their content production as a side hustle, only to jump into the venture full-time once it’s replaced their day job income. But while that sort of trajectory certainly exists, it’s far from the norm.

not everyone has the kind of financial cushion to take such a leap. They have rent to pay and mouths to feed. Also, many people are simply averse to high-risk scenarios.

That’s why several startups have sprung up with the aim of mitigating that risk.

Substack Pro is one of the most prominent examples. Substack’s executives identify writers they think have a high likelihood of succeeding on the platform. They then offer the writer a lump sum advance

A new startup called Workweek is taking the Substack Pro model and adding other extra perks.

Perhaps the most radical approach to solving the risk problem comes from Sam Lessin, a VC investor who’s married to Information-founder Jessica Lessin. His solution is to offer a large lump sum in exchange for a longterm equity stake in the creator’s business. He recently gave $1.7 million to a YouTuber named Marina Mogilko. (2021-11-12-AFormerFacebookVpThinksInvestingInHumansIsTheFutureOfVc)

According to my back-of-the-envelope math, Mogilko would need to generate over $1 million a year just for Lessin to earn back his $1.7 million in 30 years. Would I take that deal? I’m pretty confident I would.

Of all the deals I’ve outlined above, Substack Pro seems to be the most creator friendly.

Of course, it goes without saying that the vast majority of creators won’t have access to any of these deals

Without some radical shift in how our economy works — like the introduction of Universal Basic Income — I’m afraid there’s no easy answer to that question.