3 ways a private-equity firm is tapping content creators for its portfolio of brands, from co-investment to market research

• Sponsorships aren’t the only way influencers can make money working with brands.
• The Newcastle Network, a private-equity firm, is tapping creators as investors for DTC brands.
• Here’s a breakdown of Newcastle’s strategy for bringing on influencers.

With trillions of dollars being moved around in private markets, it was only a matter of time before creators got involved.

Paid sponsorships with brands are how a majority of content creators make a living on platforms like Instagram, YouTube, and TikTok. And Newcastle Network, a private-equity firm based in North Carolina, is taking those relationships one step further with the help of Village Marketing’s Vickie Segar. Private-equity (PE) investments are a way to buy shares or an ownership stake in private companies that are not listed or traded on any public financial markets.

Segar, who founded the influencer-marketing firm Village Marketing — which sold to advertising giant WPP in 2022 — joined Newcastle Network in 2021 as a partner. Since then, she’s been developing strategic partnerships with influencers through the private-equity firm, such as tapping those influencers for market research on behalf of the firm’s portfolio companies or bringing on creators themselves as investors.

“You shouldn’t just have investors who are finance people sitting at the table making decisions on where to invest millions and millions of dollars,” Segar said. “You should actually have people who understand consumer products in a different way.”

Here are 3 ways that private-equity firm Newcastle Networks is working with influencers:

1. Tapping creators for market research. “We use them to decide what products we should invest in,” Segar said. “We will give them products, we will get their opinions, we will then have them post about the product, and we will see how it performs.” If a creator’s audience loves it — or even if they hated it — that is valuable information for Newcastle and the brands.
2. Bringing on influencers as co-investors. Segar said there’s a value in having creator co-investors. “Normally, when you think about investors, you go to them for advice, their advisement, their money,” Segar said. “But with creators, their value is all of those things — plus they’re a media entity that you want to participate in the media reach of your business.”
3. Hiring influencers as regular marketing partners for Newcastle’s portfolio companies. Influencer marketing is still at the core of Segar’s strategy. “Whenever we have a portfolio brand, we bring on Village and then end up helping them with influencer marketing,” Segar said.

Newcastle has an ongoing relationship with professional-athletes-turned-creators Shawn Johnson East and Andrew East, who share family and lifestyle content with 1.5 million YouTube subscribers and millions more followers across Instagram and TikTok.

“There’s a corner of the creator economy where it’s very transactional and it’s, ‘I’ll give you a video in exchange for a check,'” Andrew East said. “We don’t view our partnerships like that.”

Instead, collaborating with brand partners on an equity level is more enticing, East said, adding that these types of deals are a way to prove to brands that they are bought in as permanent partners.

For instance, the Easts invested in the shoe brand Kizik, which makes shoes that people can slip on without needing to be tied.

As diversifying income streams becomes an increasingly relevant topic within the creator economy, private-equity deals with influencers offer a new form of revenue for creators. While some creators may eye venture capital or angel investment deals as ways to get involved in private companies, these PE deals are different in nature.

“A typical venture investment is often a minority investment with very little control over the business,” said Chris Casgar, a managing partner at Newcastle. “In the case of private equity, where we’re maybe investing larger amounts, taking more meaningful ownership positions, and in some cases, owning the brands outright, we can make decisions on behalf of the whole company or advise in a fairly substantial way about the decisions that a company makes.” 

For creators, inking a PE deal instead of choosing the VC route can also mean taking on less risk, Casgar said, as PE investments are generally made in more mature companies that have proven track records.

“The approach to angel investing and venture investing is a very different risk profile,” Casgar said. “The number of companies that get started that actually turned into something with real long-term value, meaning they turned into cash in your pocket, is very, very small.”