Capitalizing Creativity: Harnessing Online Capital-Raising for Talent-Led Ventures

Welcome to the latest edition of Capital Raising Online, our newsletter focused on providing companies with thought-provoking insights and anecdotes to drive success for their capital raise!

We believe that the private markets are on the cusp of a significant evolution, driven by the burgeoning trend of talent-led capital raises.

Throughout this edition, we break down this emerging trend, the players involved, and how to capitalize on talent-led fundraising.

Talent Lead Companies

Becoming an entrepreneur is turning into an arms race in Hollywood, as celebrities seek to ascend to the heights of moguldom, following the paths forged by fellow stars like Rihanna, Jay-Z, Jessica Alba, Gwyneth Paltrow, Dr. Dre, George Clooney and the Kardashians.

In the digital age, celebrities, influencers, and digital creators have cultivated audiences that rival the populations of large countries, spanning the expansive and ever-evolving landscape of social media.

It’s no wonder the financial world is abuzz with discussions on the inclusivity and accessibility of talent-led companies.?

Marc Andreessen, a prominent venture capitalist, emphasizes the enduring influence of celebrity-led brands,

“Celebrity-led brands, from Kim Kardashian’s Skims to Logan Paul’s Prime, are not mere trends but pivotal players in the future of consumer-facing businesses.”

This sentiment underscores a significant shift in how brands are perceived and valued in the market. When celebrity businesses come to market, they bring a unique blend of glamor and trust, elevating brand status and appealing directly to consumer aspirations.?

This "tastemaker" effect transforms how products are marketed and consumed, offering a blend of allure and authenticity that traditional advertising struggles to match.

Why Does Talent Lead? The "Tastemaker" Effect

Much like an original piece of art captures the essence of an artist’s creativity and individuality, investing in talent-led businesses allows fans to engage deeply with the cultural and historical significance of their favorite sports and entertainment icons.?

Fan investment in talent has demonstrated substantial success and longevity, particularly evident in the realm of sports.?

For example, since 1923, fans of the Green Bay Packers have collectively invested over thirty million dollars into the team. This model extends to other major sports franchises; fans can buy and sell shares in entities like the NY Knicks and NY Rangers through Madison Square Garden. Globally, teams such as Manchester United, ROMA, and Juventus offer publicly traded shares, underscoring the widespread viability of fan-based investing.

An early example of this is with music Icon David Bowie, and Bowie Bonds.

Case Study: Bowie Bonds

In the late 1990s, iconic musician David Bowie, facing declining album sales from his earlier peak, sought innovative financial solutions to regain control over his music catalog.

Challenge:

• Bowie needed to secure funding to buy back the rights to his songs from his previous manager, aiming to regain distribution control and secure his financial future.

Solution:

• In partnership with David Pullman of Prudential Insurance Company, Bowie introduced "Bowie Bonds" in 1997. These were asset-backed securities tied to the future royalties of his 25 albums released before 1993. This move effectively utilized a model similar to Equity Crowdfunding (ECF), allowing Bowie to raise $55 million through the sale of these bonds, which offered a 7.9% interest rate over ten years.

Outcome:

• The bonds were fully redeemed by 2007 without default. This strategic financial maneuver not only ensured Bowie regained control over his music but also highlighted the potential of online capital-raising mechanisms to transform artist-driven business ventures, setting a precedent for future innovations in the creative industries.

David Bowie’s pioneering use of "Bowie Bonds" in 1997 exemplifies how talents can leverage their personal brand to fund and control their ventures, transforming fan support into financial backing.?

Today this model goes further, flipping the script and turning fans into owners, with a potential for a return on investment into their favorite celebrity. Generating a richer experience for the fans as they become “members of the club.”?

How It Works

Understanding the mechanics of talent-led capital raising is crucial before exploring the platforms that facilitate this innovative funding model.?

This approach maximizes the extensive reach and influence of digital influencers and celebrities to offer diverse investment opportunities.?

These opportunities range from equity stakes in brands where the talent is a founder, to revenue sharing from digital platforms like YouTube, and profit-sharing from new ventures in industries such as video games and films.

Such flexibility allows talents to leverage their personal brands and establish deeper connections with their audiences.?

Central to these transactions are the JOBS Act securities exemptions, which streamline the public offering process while ensuring transparency and regulatory compliance.

By leveraging their vast social reach, these talents are pioneering a new frontier in capital raising under Regulation Crowdfunding (Reg CF).

This regulation allows them to raise up to $5 million annually from investors, democratizing investment on an unprecedented scale.?

It’s also rapid and low-cost to launch, giving companies streamlined access to growth capital.?

For perspective, consider the following:

• In 2023, the average Instagram account for creators and celebrities had about 36,137 followers
• Successful Reg CF campaigns on the top 10 platforms saw an average investment of $1,190 in 2023

If a creator converts just 5% of their followers at the average investment size, they could potentially raise over $2 million to fund their business ventures.?

This model can not only be a strong source of growth capital, but it ensures that talents retain greater control over their projects.

It also offers a more direct and expedient funding route than traditional venture capital methods and fosters a stronger connection with fans who evolve into committed brand ambassadors.

While the potential for returns is compelling, inherent risks are present. To mitigate these risks, each deal on a funding portal is subjected to due diligence, including reviews or audits of financial statements, detailed business plans, and Bad Actor checks—all documented in a Form C filing with the SEC.

The investment opportunity itself is designed to be highly accessible.

Individuals over the age of 18 can invest using various payment methods such as major credit cards, ACH transfers, wire transfers, or digital wallets like Apple Pay or Google Pay.?

Each platform ensures the security and legality of transactions with thorough KYC (Know Your Customer) and AML (Anti-Money Laundering) checks.?

And investors can accomplish all this in under one minute via Issuance

The Issuance Express Platform

The Issuance platform operates on the notion that it must provide a seamless and efficient investment process for talent-led capital raising to be successful.

And that’s exactly what it does.?

An investor can compliantly checkout for securities in under 1-minute, all while background checks are being run in the background.?

Issuance also operates as a white-label platform, where companies raising capital own their investor data.?

This means that talent, creators, and companies that have loyal followings of loyal fans and customers won’t see these individuals exploited and pushed to other companies.?

Operating under the umbrella of its wholly-owned subsidiary, JumpStart Micro Inc., doing business as Issuance Express, the platform is a registered Funding Portal with the SEC, further solidifying our commitment to transparency and legality.

An Evolution is Occurring

Everyday fans, followers, and customers are looking to become true owners in the brands and businesses they help build. They want a share of the profits of a successful venture, especially when their favorite creator is involved.?

Talent and creators are tired of seeing a handful of companies take control of their projects and reap all the profits from their hard work. From ownership rights to profit-sharing, they have been cut out and controlled for too long.?

It’s a perfect storm.?

With this in mind, Issuance has strategically positioned itself at the forefront of the talent-led capital-raising trend through a pivotal partnership with a major talent agency.?

We are committed to reshaping the private markets industry and spearheading innovative investment solutions that meet the needs of both talent-led businesses and investors alike.

Stay ahead of the curve with Capital Raising Online.

Capital Raising Online: Equity Crowdfunding is the new frontier of capital raising and it is digital-first and democratizing early-stage investing for the masses. Every month we discuss the ever-changing regulation financing industry as it continues to expand. From important developments to critical considerations and insights, we provide an experienced perspective on the industry.?

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