There was a time when venture capitalists were a restricted and specialized number of investors and when celebrities were just celebrities excelling in their jobs and appearing on Vogue or on the morning show.
These two worlds are now closer than they have ever been as many celebrities become active startup investors. Their names are currently quoted on VentureBeat or TechCrunch as much as on sport or fashion magazines.
According to CB Insights from 2007 until today, 75 celebrity investors have participated to over 350 funding rounds totalling approximately $4.6B to private companies.[1]
The drivers transforming stars to angel investors
Surely the profit appeal plays a role here, in a time where the yield on traditional investments has constantly decreased; however, it is not the only reason.
Investing is easier today than it was decades ago. Many more information are available allowing also non-professional investors to tap into venture capital. Equity crowdfunding platforms help in selecting the most prominent deals, hence reducing the need to go over thousands of pitches.
Startups are about bringing new services and products to address unmet or unexpressed desires. It is about funding companies who could change, improve and enhance the world we live in, and the services we use in everyday life and creating a society impact is another of the key drivers for investing, as explained by Ashton Kutcher: “I’m proactively funding brilliant people trying to solve hard problems.”
More on the emotional side, but not for this less relevant, startups are cool and connecting with them brings a boost for the personal branding. This is well described in the words of NBA player Andre Iguodala “When I first came into the league, you just had to have a certain car, or two or three or four or five, and you had certain clothes, certain shoes, to let everybody know you were a basketball player.” These days, taking part in a company with the ambition to be the new Google or Amazon, is probably the best way to show that you are much more than a sportsman or an actor.
Benefit for startups
Startup challenges can take different forms but they normally articulate around two aspects: building awareness and secure the needed funds.
Having one of more celebrities in the cap table represent a hike for being know by a critical mass of potential customers as well as supporting in finding additional investors.
Everything celebrities do is constantly under scrutiny of journalists and fans. Whatever they do, will reach a wide echo. Securing investment from an Emmy Award or Oscar winner, is a more efficient publicity than advertising during the Super Bowl or an online advertising running on an illimited budget.
The same logic brings not only customers but also investors as many fans would like to invest in the same venture as their idols do and, still thanks to equity crowdfunding platforms, they can do it with just few bucks.
In a recent meeting we had a Bloomio, a startup unicorn confessed us that, after a very famous Hollywood star joined their group of investors, they receive daily requests from all over the globe from people interested in buying their shares.
Top 10 Celebrities investing in startups
Ashton Kutcher: Skype, Airbnb, Casper
Nas (Nasir Jones): Casper, Abacus, Cointent
Troy Carter : Julep, TigerBeat, Kano
Joe Montana: Mux, Bloomlife, Skymind
Jared Leto: Frame.io, DocuSign
Carmelo Anthony: Xperiel, MakeSpace
Kobe Bryant: VIPKid, Scopely
Scooter Braun: Stem, Casper
Steve Nash: Casper, Bircbox
Linking Park: Robinhood, PopularPays
[1] https://www.cbinsights.com/research/celebrity-startup-top-investors/
