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Report: Creator economy nabs record $1.3B in 2021 alone

Startups in the creator economy have raised $1.33 billion so far in 2021, setting a record according to a new report by tech analytics firm CB Insights.

The numbers: The creator economy is hot right now. Investment in creator economy companies in just 2021 tops the previous five years combined. Investment in creator-focused firms between 2016-2020 totaled about $1.17 billion, while 6 months in 2021 have netted $1.33 billion, per CB Insights.

The Information reports that investments in creator-focused startups have actually topped $2 billion in 2021. The data disparity — which we'll discuss more below — illustrates the murky understanding of what the creator economy is.

What it means: Creators are leading a multi-billion dollar movement, and are harnessing power by monetizing their skills, influence, and creativity. As a result, investors are betting big on platforms that are enabling creators’ success.

Driving change: The creator-led shift is driving a culture that recognizes people for their talent and rewards creativity. As new companies emerge to serve creators, older platforms like Facebook, Twitter, and Instagram have jumped on board by making it easier for creators to earn money from subscriptions, tips, tickets, and other tools.

The biggest deals: A herd of unicorns is forming in the creator economy. Here are the biggest deals so far in 2021.

  • Online course platform Kajabi raised $550 million at a $2 billion valuation.

  • Personalized video shout-out app Cameo raised $100 million at a $1 billion valuation.

  • Patreon raised $155 million at a $4 billion valuation.

  • Audio-conversation app Clubhouse has raised $300 million in 2021 and has a valuation of $4 billion.

  • "Baby unicorns" include newsletter tool Substack (valued at $650 million), photo-editing app VSCO ($550 million), and audio-editing platform Splice ($500 million).

a16z backs creators: In 2021 alone, Andreesen Horowitz has invested more than $500 million into creator-economy companies. Its largest rounds have been in Clubhouse ($300M), the photo-sharing app BeReel ($150M), and creator-oriented financial startup Stir Money ($100M).

Creator economy defined: The creator economy is a broad, amorphous industry that refers to individuals and businesses monetizing their influence, creativity, and/or skills. It includes developers, writers, vloggers, artists, crypto creators, influencers, and more as well as companies serving creators with tools like analytics, marketing, editing, or organization.

Roll call: Josh Constine, principal investor at SignalFire, estimates there are more than 50 million people in the creator economy. He expects that number to grow as more creators move their fans off social networks to monetize them.

“There’s been a societal shift in consciousness towards caring more about feeling fulfilled in our jobs, having control over how we spend our time, and being our own boss. Fans see creators doing what they love for a living and aspire to follow that path that never leads to a cubicle.” —Josh Constine

Revenue sources: Deals with brands remain the dominant source of revenue for creators, according to a 2021 Influencer MarketingHub study. 77 percent of creators generate their revenue through deals with brands, which is 3x more than every other revenue source combined, including ad revenue, affiliate links, tips, or subscriptions.

Creator economy divide: The top 1 percent of creators earn about 80% of all income produced in the creator economy.

Highlighting ambiguity: Is a developer a part of the creator economy? According to studies like these from CB Insights and the Influencer MarketingHub, no. Their lack of inclusion highlights the nebulous nature of how people define the creator economy, and thus track its performance. Independent developers building products are rarely included in creator economy studies despite their contributions to the space.

Indie hackers flex: Indie Hackers’ Products page details hundreds of largely SaaS creators earning more than $10,000 in self-reported, monthly recurring revenue. 50 of those companies have Stripe-verified revenues upwards of $20,000 MRR.

Developers at an advantage: Developer and writer Matt Rickard recently argued that developer creators are well-positioned in the creator economy. With relatively low entry costs and numerous tools that simplify coding, developer creators can become leaders in the burgeoning industry.

“Developers will win the creator economy as it becomes easier to be a developer creator. The long tail of SaaS companies is valuable but untapped.” —Matt Rickard

What do you think of the creator economy’s growth? Are developers a part of the creator economy? Share your thoughts below.

  1. 2

    Great post!

    I would argue that SaaS developers should not be included in the creator economy. Why? Software as a service is a product ,and the revenue is transactional: this for that. SaaS developers are small entrepreneurs, small business owners. That business, could be sold and continue to be operated by the new owner.

    I'd say the creator economy is about the kind of creator whose operation could not continue without them (pre-recorded courses are a likely exception, but I'd argue those could be considered small businesses as well, like SaaS). If it wouldn't make sense on Patreon, I'd say it wouldn't qualify as a being part of the creator economy.

    An exception would be an open-source software creator who accepts donations.

    The distinction is important, in my opinion, because the potential for non-transactional income for creators is what makes the emergence of the creator economy unique, disruptive and part of a larger transformation of economy as a whole.

    1. 1

      Hi @mizkirsten, how can I help with running the "learn to code group"? It's in IH 's inactive group and I'd like to move it out of there. Thanks.

      1. 1

        Hi, @CheekyRugo . I'm not 100% sure how we can transfer it to you, but that would be a great idea :-) I tried a few things months ago to get it going but didn't have a lot of success. You can probably ask whomever is the new head of community here at IH.

        1. 1

          I was thinking of using IH to document my #100daysofcode journey instead of Twitter. Wouldn't daily posting on it be enough to get it back to active? Thanks!

          1. 1

            Oh! Yeah, I think it would :-) Sorry, I totally jumped to a conclusion about your message, heh. I love your idea about your #100daysofcode journey!

            1. 1

              Alright, thanks! Will start the daily post. Let me know if ever there's anything I can do to help the group.
              Cheers!

  2. 2

    "Developer creators can become leaders in the burgeoning industry" - Don't see how you can argue against this.

  3. 2

    Very insightful share. Thanks for the breakdown, Bobby.

  4. 1

    Insightful and definitely thought-provoking. Thanks for posting!

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