We discussed last year that the creator economy continues to evolve at high speed. According to Goldman Sachs, the creator economy was valued at $250 billion globally in 2023 and is projected to reach $480 billion by 2027, growing at a compound annual growth rate of around 14%.
Such fast-paced evolution, supercharged by gen AI tools creating new revenue streams, has posed challenges for growth when met with traditional funding and banking models. At the same time, it's only natural that acquisitive agencies, banks and VC funds are attracted to the creator economy's growth, alongside brands who are always on the lookout for authentic voices and fresh content to invest in.
One of the biggest hurdles for the creator economy has been the ability to tap into traditional funding models both for day-to-day business operations and for long-term growth. Traditional banks often struggle to decode the financials and box them neatly into the usual types of businesses they work with because of:
- irregular income patterns;
- multiple revenue streams - brand deals, merchandise, fan subscriptions, ad revenue — which can be inconsistent and tough to track; and
- problems around tax, late payments and currency exchange for global talent stemming from rapid growth.
We have seen new fintech services, like Willa, Collective and Karat, entering the market to offer modern tools to deal with quick cross-border payments, flexible invoicing and tailored loans. The more traditional banks and financial institutions have been working hard to adapt to be able to benefit from the creator economy and have long been targeting agencies and scaled businesses in the creator economy (as more "recognisable" targets than individual creators).
Aside from day-to-day financial management, creators need long-term backing to scale up. We are seeing more acquisitions in the sector globally (including in the UK), with networks like Publicis, and challenger groups like Stagwell and Croud, making headline-grabbing acquisitions. These deals not only bring much-needed capital but can set up the infrastructure that creators need such as marketing support, data analytics, enhanced production facilities and a broader global footprint. Acquirers like Brave Bison and others have shown that buying specialist agencies can spark further innovation in short-form content, influencer marketing and digital storytelling.
"We're seeing a growing cohort of marketing leaders seeking an alternative to the legacy holding companies. Continued growth in our creative and media portfolios, and our deep commitment to scaling our research, digital transformation and technology businesses will drive connected solutions. This gives us confidence that we can help clients transform and win on an ongoing basis," James Townsend, CEO of Stagwell EMEA.
Venture capital is another growth avenue. Traditional investors (such as BGF) are recognising that the creator economy is not just about big personalities on social media platforms. There is a mature sector forming, with robust data strategies, analytics platforms and comprehensive brand partnerships. This has led to greater enthusiasm for UK-based creator-focused ventures that bring revenue pipelines and strong online communities to the table. More funds are now earmarked for subscription platforms, advanced content tools and talent marketplaces, with greater likelihood of sustainable returns. New creator focussed funds are also on the rise, often set up by creators who are looking to support and grow the creator economy as a whole and give opportunities to new talent and smaller businesses.
An added spark to the creator economy has come from AI offering dynamic tools for content editing and data insights. Creators who bring this tech expertise to an investor pitch are more likely to secure the support they need. They can position themselves not just as individuals (or representing individuals) with platforms but as founders of businesses driven by data-led tools. Creators who refine their core offering and leverage automation can also free up more time to build higher-value personalised services such as hosting live events or launching tailored products. Diversifying earnings reduces risk and gives investors greater confidence. As more of these businesses prove their resilience, the space continues to be disrupted and consolidated. Investors are of course cautious of over-reliance on AI and the most successful businesses in this sector are harnessing the power of AI whilst recognising its creative weaknesses and legal challenges.
While there continue to be funding challenges for the creator economy, there is a sense of optimism around UK creator-led ventures. The door is wide open for new players backed by innovative technology and revenue streams to secure deals that allow them to innovate and grow more boldly.
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