Movies and TV shows aren’t the only forms of media we consume that intentionally sprinkle subtle — and sometimes not so subtle — product placement.
Product placement also exists all across social media, from YouTube to TikTok and Instagram. This often happens when a creator is a cofounder of a brand, like Logan Paul with the beverage company Prime, or is an investor.
Unlike when an influencer is paid by a brand to promote a product, if they are an investor in a company, they don’t have to disclose that relationship on social media. And many use that advantage to feature products or services in the background of their videos. That can make them valuable investors in upstart brands.
One company helping early-stage startups connect with influencers for capital and marketing services is the Utah-based creator incubator Spacestation.
Spacestation is a creator-founded group, cofounded by internet celebrity Shaun McBride, known as Shonduras on YouTube and Snapchat. The company’s investment arm, Spacestation Investments, helps its influencer and athlete clients become angel investors in companies in seed and pre-seed stages, said Tim Holladay, managing partner of Spacestation Investments.
“Sometimes we’re investing in really early-stage companies where influencer marketing just isn’t quite the thing yet,” Holladay said. “Influencer marketing is an incredible channel, but it can also be quite expensive for an early-stage company. So, they’re getting our investment, but then they’re also getting direct access to these creator investors.”
Spacestation Integrations, the company’s talent management division, works with creators in categories like family, lifestyle, photography, and gaming. Creators who take part in the company’s investment arm don’t sit on the board of these companies or advise them, but there are opportunities to work with the company on influencer-marketing campaigns, as well as an increased incentive to include the products and services in their content.
“We’re not expecting, and asking, our creators to do work for free, even when they invest,” Holladay said. “But if they’re engaged in some kind of a campaign, where otherwise they would charge $10,000, maybe they charge $5,000. We open that communication directly to the founders, if they’d like to have access to these creators.”
‘Our type of investing is the highest risk you can do, and we know that’
Spacestation Investments launched in 2019, after the company wrote a check to Magic Spoon, a high-protein and gluten-free cereal.
“We also ran influencer marketing for Magic Spoon, for a while,” Holladay said. “That’s what got us excited — we were like, wait a second — maybe maybe we could do this? Maybe we could become investors where we focus on working with creators and investing in companies where they could move the needle?”
To date, Spacestation has invested in 93 companies, and it has brought on creators across Instagram, YouTube, TikTok and Snapchat, as well as pro athletes across the NBA, NHL, NFL and MLB.
On an average deal, the firm brings in about 15 individuals, cutting around a $300,000 check, Holladay said. These are generally pre-seed and seed stage companies, with less than $3 million in revenue, as well as some later-stage companies. Most companies are in consumer packaged goods, like Magic Spoon or Olipop, and B2B companies that support e-commerce, because those companies are good for creators to market.
“Our average investor creator is investing $10,000 to $50,000 in a few companies per year,” Holladay said. “Our team gathers interest from all investors, sign, wire, and close.”
Holladay advises his clients in writing multiple smaller checks to spread risk.
“We believe in diversifying,” he added. “Not only should creator investors spread risk by participating in a number of investments, but that early-stage venture investing should be just a part of how they invest their capital.”
Like Spacestation, many creator talent firms and agencies, as well as financial firms, are bringing investment opportunities to clients. Two examples are Night Ventures, which is an early-stage consumer fund founded by the talent management firm Night, and Newcastle Network, which is a private-equity firm based in Boston. Both are tapping creators to invest in, and advise, early-stage startups and DTC brands.
“There’s pretty good data now around influencers and their lifespan as an influencer – and it’s not infinite, and it’s not very long, quite frankly, compared to other careers,” Holladay said. “Therefore, while there’s cash flowing, take some of that capital and put it to work so that in 10 or 20 years from now you are in a great position. We highly recommend that for all creators.”
“This should not be the only investment kind of activity that anybody does, including creators,” Holladay added. “Our type of investing is the highest risk you can do, and we know that. It also provides some of the largest returns possible. Where it makes sense, our creator investors help minimize that risk by taking an active role in driving brand growth. All that said, we’ve invested in SpaceX, Oura Ring, and other multibillion-dollar companies. We like to give our investors options with different risk and return profiles.”
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