Creator-led businesses are on the rise, yet venture capitalists are hesitant to invest due to perceived risks. The transition from influencer to entrepreneur poses significant challenges, including audience retention and operational viability. However, promising growth is anticipated as creators leverage their popularity alongside professional management, emphasizing product quality and strategic business acumen.
In Mumbai, there is a growing trend of creators venturing into business, yet they face challenges in attracting investment. Venture capitalists perceive influencer-led startups as riskier due to operational uncertainties, unpredictable consumer trends, and low audience loyalty. Despite their popularity, these creators find it difficult to convert their online following into sustainable business success. Pranav Pai, a founding partner at 3one4 Capital, acknowledges the potential of creator businesses but stresses that they often rely too heavily on fleeting viral trends, making consistent customer engagement challenging.
Pai further emphasizes that building a resilient brand requires strategy beyond just a large follower count. Influencers must possess a distinct product vision and a comprehensive understanding of their target market. Historically, many creators have struggled in their transition to entrepreneurship, complicating funding opportunities due to skepticism from investors. Apurva Dixit from Blume Ventures notes that investors prioritize a founder’s product vision and market strategy over their social media popularity when evaluating potential investments.
Despite investor hesitancy, there is anticipated growth in creator-led businesses. Pranav Panpalia, founder of Opraahfx, highlights a trend where more creators will collaborate with experienced partners to successfully launch their ventures. For example, fitness influencer Gaurav Taneja established Rosier Foods, which produces A2 Ghee, and the Beastlife nutrition brand. He stated that utilizing expertise rather than marketing budgets has kept his businesses financially sound.
Additionally, Shlok Srivastava, known as Techburner, transitioned from basic product sales to launching a smartwatch called Anarc. His initial investment of $1 million garnered significant sales in a short timeframe, reflecting his capability as a tech creator. However, he recognizes a prevailing skepticism from VCs regarding the balancing act of content creation and entrepreneurship.
The essence of running a creator-led business, Srivastava asserts, lies in the quality of the product rather than the creator’s fame. He contends that investors will ultimately assess these brands as traditional businesses. Amiya Swarup from EY recommends that creators emphasize their product’s potential when seeking funding, as investors will scrutinize them through a conventional business framework. Emerging agencies aim to support influencer brands, possibly enhancing the success of creator-led enterprises.
The current climate reveals a noteworthy trend of social media creators launching their own businesses. However, this shift faces substantial hurdles in securing venture capital due to perceptions of elevated risks associated with influencer-led startups. The factors contributing to this skepticism include unpredictable market trends, the challenges in retaining audience engagement, and the operational complexities inherent in brand development. The landscape suggests both opportunities and challenges as creators seek to transition their popularity into sustainable business ventures.
In summary, while there is a growing surge of creators entering the entrepreneurial space, they face reluctance from investors due to the perceived instability of their business models. Successful transitions from influencers to founders require strong brand-building strategies, product quality, and effective market navigation. Despite these challenges, collaborative efforts, expertise in product knowledge, and innovative approaches can facilitate the sustainable growth of creator-led brands in the future.
Original Source: www.livemint.com
Leave a Reply