Social Currency: How Influencers Will Become The Next Venture Capitalists
BY KILLIAN WELLS
⏰ 3 min read
In 1968, Blue Ribbon Sports made NBA superstar Spencer Haywood an offer: a 10% stake in the company or $100,000 in exchange for an endorsement deal. Haywood’s agent, likely interested in his own quick commission, advised his client to take the one-time payment, and he did. Four years later, Blue Ribbon Sports became Nike Inc. If Haywood had taken the backend deal he’d now be worth an estimated $8.6 billion.
In 2004, 50 Cent took a minority share (reportedly 2%) in Glacéau to be a brand ambassador for Vitamin Water. Three years later his gamble paid off to the tune of $100 million when Coca-Cola bought Glacéau for $4.1 billion.
Today, social media influencers are as relevant as NBA stars and rappers, but most have the mindset of Spencer Haywood’s agent as opposed to 50 Cent—take the cash. There’s no question that careers in social media can burn out as quickly as they spark and that’s exactly why a quick cash grab shouldn’t always be the main objective. In the not too distant future I’m confident we’ll see now prominent influencers wishing they’d invested their social currency in more long term opportunities.
We’re living in the golden age of startups. More and more entrepreneurs are innovating at a rapid pace and living the American dream. But startups in their early stages don’t always have the cash to pay influencers, and that’s where influencers are totally missing the mark when they’ll only entertain one-time upfront payments. Influence, also known as social currency, is as good as money because the right promotion can boost sales and profits or even lead to millions from a crowdfunding campaign. A backend deal for a $10K Instagram post or YouTube activation could instead be worth a million dollars in a few years.
Without risk, there’s no reward, and venture capitalists who invest their money in new companies have always known so. The word “venture” literally means “a risky undertaking.”
I founded Social Currency Ventures with the goal of creating new revenue streams for influencers and brands and revolutionizing venture capital. By vetting both parties in a deal—the startup and the influencers—the risk is minimized for everyone. We’re building a one-of-a-kind community infrastructure to make deals happen quickly and painlessly, like Shark Tank on steroids.
Under SCV Capital, our first of its kind business model gives influencers the ability to build an investment portfolio without any learning curve, corporate formations, or red tape. Social Currency Ventures manages everything from vetting to agreements to accounting, including streamlined payouts of royalties and dividends in the same manner as a record label would for an artist. We can pool together multiple influencers for a single deal, increasing the odds of a lucrative outcome for both the influencers and the startup. Plus, everyone gets their fair percentage based on our proprietary Social Currency Score™, which analyzes following and engagement numbers at the time the deal is packaged.
For startups, our business model means the convenience of only having to issue stock or royalties to a single entity, and we handle all influencer/startup coordination. Influencers from anywhere in the world can be part of a deal—something that can’t be done easily when issuing stock directly to individuals because some corporate entities can’t have foreign shareholders. Our fully integrated site hosts every feature necessary to execute deals and manage them with ease, with separate tailored experiences for influencers and brands.
We’re not limited to startups, either. Our model can be applied to any promising businesses and products that just need a boost of exposure to turn a profit. Social Currency Ventures combines the exclusivity of Hollywood, the innovation of Silicon Valley, and the creativity of Madison Avenue for a disruptive fintech product with endless possibilities.
Money is being left on the table, but we’re here to change that.