How celebrities became VCs and VCs became celebrities

Celebrity venture capitalism

The Machine Shop Ventures team followed soon after and made their mark with investments in Lyft, Robinhood, Blue Bottle Coffee, and other notable businesses. Ashton Kutcher wasn’t far behind. With his previous successful investments in his VC firm, Sound Ventures (which went public in 2015 with the backing of Live Nation), he has arguably become the poster child for celebrity capitalism. By 2023, his impact on the industry was undeniable, with a recently announced $240M AI fund and a portfolio boasting early deals in Airbnb, Bird, Nest, Robinhood, Uber , Pinterest and Square. These investments brought returns that left many traditional VCs in awe.

These fairs realized the power of their platforms. Their followers can have access to more than just income; instead, the latter gave celebrity investors ultimate power over the brands in which they had a stake. Instead of cashing in a $20,000 endorsement check from one of those startups who want to do a little marketing, they can play the long game. If they invested in the companies directly and used their media access to grow the brand, their earnings could increase, sometimes 50 to 100 times.

These new moguls weren’t passive investors, either – they entered the fray, rubbing shoulders and competing with Silicon Valley titans like A16Z and Sequoia Capital.

Rising investment in stars

Today, the intersection of entertainment and investment extends beyond the realm of corporate business, encompassing a universe where celebrities are not just the faces of brands but also founders, investors, and financial magnates themselves.

In my opinion, the quintessential example of this style is the incomparable Kim Kardashian. As we watched celebrities monetize their products and go from collecting endorsement checks to investing in companies, Kim went above and beyond. He took control of the construction process of the company itself and began to create a qualified network within his government. Her portfolio includes KKW Beauty (her $1 billion beauty brand, making her a “unicorn”), Skims (an underwear and clothing brand estimated to cost his is about 225 million dollars), and now he is very. a private equity firm, SKKY Partners (founded with Jay Sammons, a former Carlyle Group partner) focused on direct-to-consumer products.

In addition to the excellent financial success of his projects, Kim Kardashian’s involvement in the world of business and finance stands out for another reason. The world of venture capital is heavily skewed toward male founders; in 2020, only about 2.3 percent of all VC funding went to startups led by women. Overall, Kardashian’s path reflects a changing paradigm of what it means to be a celebrity and a mogul, setting new standards for women in business and beyond venture capital. With a net worth now estimated at $1.8 billion, Kardashian’s past (which has time to grab headlines, from a scandalous sex tape to a short-lived marriage) is now it is like the latest in his current achievements. A lawyer, investor, and founder, she is a woman on a mission.

But back in 2014, much of this discovery of the potential of celebrities to shape the business world was still in the future. And behind this growing process of star investments, which increases the attraction of the space where showbiz meets startups, was at the top of Y-Combinator.

Acceleration begins

In the mid-2000s, the existing venture capital scene underwent a radical shake-up with the arrival of Y Combinator (YC). Launched in March 2005, YC wasn’t just another VC firm—it launched a startup accelerator, a structured program where startups, in exchange for a whopping 7 percent of equity, will receive up to $300,000 in seed money, as well as valuable training. and industrial relations. During an intensive three-month period, these emerging companies refined their positions and products, culminating in the much-anticipated Demo Day, a tradition that they demonstrated their skills to an eager crowd of investors.

The YC effect was palpable. As startups like Dropbox, Airbnb, Stripe, Coinbase, Instacart, and Reddit emerged from its stable, YC’s influence in the industry rose. They weren’t just success stories, though there were plenty of them; it was how YC changed the power between investors and founders. Startups with a YC badge suddenly found doors opening without leverage, leveling the playing field and giving founders more leverage in future funding negotiations. In addition, YC has simplified initial investment by introducing SAFE (Simple Agreement for Future Equity), providing a straightforward alternative to traditional convertible notes.

What set YC apart from its competitors was its commitment to democratize access to capital. Unlike the closed doors of traditional VC firms, YC’s doors were open to everyone, bringing a wave of innovation. This was not an exclusive Silicon Valley group; startups from all corners of the world flocked to YC, drawn by its promise of mentorship and opportunity. And while YC’s heart was technology, its hands reached out to various fields, from biotech to hardware.

Without the money, YC became like a startup course. Through initiatives like the Startup School, a series of insightful essays published on its blog, and valuable advice freely shared in its lectures, YC was as much a mentor as an investor. The company’s motto of “make something people want”, which emphasizes the importance of product market fit, has become gospel for startups around the world.

As the years progressed, YC’s influence deepened. It has introduced the Development Fund, to ensure its participation in success stories that have helped writing better than the first stages. Throughout its evolution, YC has remained a beacon, a testament to the power of mentorship, innovation, and relentless pursuit of building what people truly want. In particular, Sam Altman, the father of ChatGPT, was one of the first partners of Y-Combinator at the age of twenty-six, and served as the president of the organization since 2014 to 2019, before continuing to focus on the formation of the organization. Full-time OpenAI.

Y-Combinator, along with other leading Bay Area funds such as Sequoia and A16Z, pioneered the rinse-and-pee-pee business plan of the early twenty-first century. .

VC boasts

Looking back now, this era of celebrity business was responsible for making billions of dollars for many seemingly overnight fortunes, which spawned a culture all to ridicule “the so-called experts”. Stories that inspired social media like “Praying Out” and “VC Brags,” where luxury world ski and yacht trips, as well as absurd morning routines, would often be satirized with increasing popularity. Some VCs became celebrities in their own right, gaining huge social media followings, throwing lavish parties, and living a lavish lifestyle, while the founders they had backed grind night after night in the hope that one day they will find the same wealth and fame.

In retrospect, the sudden and meteoric rise of VC culture during this period may also have contributed to the backlash against it. It’s almost like VC egos inflated overnight with Tesla and Patagonia clothing alike.

Investors became celebrities

Some investors went even further, creating networks that far exceeded their investment careers. One such example is the team behind the “All-In Podcast,” which has emerged as a key voice in technology, finance and politics, gaining a devoted following for its insightful and candid discussions. usually. The podcast is hosted by a group of famous investors and entrepreneurs known collectively as the “All-In Syndicate”: Chamath Palihapitiya, former CEO of Facebook and founder of Social Capital, is celebrated for his powerful insight and his clear views on capital and society. information; Jason Calacanis, a serial entrepreneur and angel investor known for his extensive experience in the startup environment, including early investments in companies such as Uber and Robinhood; David Sacks, PayPal expert and founder of Yammer with a combination of operational knowledge and investment knowledge; and David Friedberg, CEO of the Productivity Board and a former Google executive with deep knowledge of climate science and biotechnology.

Together, these four investors-cum-media-personalities offer a mix of expertise, opinion and analysis, making the “All-In Podcast” a tool to help anyone interested in the intersection of technology, business and current affairs. The four pack has gathered millions of Twitter followers and has even started its own forum, with business icons like Bill Gurley (VC behind the success of Uber) and entrepreneurs including Elon Musk. Have they had successful investment careers? Of course. But what is becoming more evident every day is that their ability to create a brand and capture the attention of a large audience is stronger than their ability to manage money. They have literally taken venture capital and made it into a celebrity sport.

Adapted with permission of the publisher, Wiley, from The Money Myth: Overturning the Failing Financial System by Tatiana Koffman. Copyright © 2024 John Wiley & Sons, Inc. All rights reserved. This book is available at all bookstores and eBooks.