During VidCon 2023, our team at Net Influencer had the opportunity to engage in a thoughtful discussion with Marshall Sandman, who serves as the managing partner of Animal Capital, a venture capital firm based in Los Angeles, California. Founded in 2021, Animal Capital has made a name for itself as a pioneering force, particularly in the investment of early stage and growth-oriented startups within the consumer and financial technology, health, wellness, and media sectors.
Notably, Animal Capital is a trailblazer in its approach – it is the first venture capital fund that specifically targets Generation Z, with renowned digital creators among its founding members. The firm continues to predominantly invest in the consumer, financial technology, health, wellness, and media arenas.
In our conversation Marshall breaks down the inner workings of the firm, its transformative vision, and the future of influencer marketing. His insights unravel the complex relationship between influencers and startups, offering a fresh perspective for those who tread the waters of influencer marketing.
Bridging Venture Capital Investment And The Vibrant World Of TikTok, A Conversation With Marshall Sandman Of Animal Capital
Corporate Constraints and New Directions
Sandman, a former Time Warner executive, experienced firsthand the hurdles of mobilizing corporate resources for high-potential startups. Despite the giant corporation’s assets and good intentions, Sandman often found himself caught in the middle, prompting him to veer towards a more agile business venture.
“At Time Warner, we made smart investments but struggled to navigate through corporate bureaucracy,” Sandman noted. “I wanted to leverage the same principles but in a more nimble, effective manner.”
The Birth and Evolution of Animal Capital
This drive led to the inception of Animal Capital. Along with co-founders Josh Richards, Michael Gruen,Sandman sought to imbue the firm with the ethos of delivering more than promised – a credo he’d adopted during his tenure at Goldman Sachs.
“Our goal was simple: to become a trusted partner because we consistently deliver on our promises,” Sandman said. He beamed with pride as he discussed Animal Capital’s investment in Whatnot, a live conferencing platform now valued at nearly $4 billion.
Although Animal Capital initially invested across a variety of sectors, its evolution led to a more targeted focus on consumer tech businesses that either improve or entertain people’s lives. This ‘founder-first’ approach prioritizes software development, albeit with a moderate interest in consumer products and hardware.
The Dance of Celebrities in Early-Stage Capital Deals
Animal Capital’s focus on consumer tech with the ambition to make a meaningful impact, he navigated the uncharted waters of incorporating both new media and traditional celebrities into early-stage capital deals. The path was fraught with obstacles but equally filled with promising opportunities.
“The crucial point is aligning celebrities, founders, and Limited Partners (LPs). Each deal has its unique dynamics,” said Sandman. The emphasis, he pointed out, was on synergy and communication. Every celebrity has a distinct brand, audience, and passion. Aligning these elements with a startup’s needs is pivotal to the partnership’s success.
For instance, Paris Hilton’s association with a startup called Colossal, which uses genetic engineering to resurrect extinct species, perfectly aligns with her passion for animal conservation. This collaboration not only raised Colossal’s visibility but also underscored the power of such partnerships.
Challenges and Opportunities with Limited Partners (LPs)
As Animal Capital continues to mature and expand its funds, the stakes with LPs increase. Sandman points out his preference for working with founders eager to participate in the firm’s portfolio.
“The larger the institution, the greater the challenge,” Sandman admitted. “We often get asked, ‘What exactly is your approach?'”
Rather than providing a cookie-cutter response, Sandman emphasizes the firm’s proven track record and its myriad case studies as testimony to its ability to add value in diverse and innovative ways.
VidCon: A Hub for the Influencer Economy
Against the backdrop of VidCon, the annual gathering of content creators, influencers, and industry professionals, Sandman shares his thoughts on the thriving creator economy. The sector remains robust despite economic fluctuations and the shifting tech landscape. As businesses continue to grow and scale, Sandman foresees a pivotal role for Animal Capital in bridging the gap between creators and entrepreneurs.
Sandman stresses the importance of conversations between creators and entrepreneurs. He cites Tripp’s, a platform that enables creators to secure loans based on projected ad revenue, as an innovative standout in a saturated market.
He envisions a future where creative-driven media businesses can capitalize on the synergy between different assets and enjoy mutual growth. As an example, he points to Hello Sunshine and the Wheelhouse Group, which successfully merge investments, marketing, brand development, and content creation.
While there are a plethora of opportunities in the creator economy, Sandman advises a strategic approach. Animal Capital’s philosophy is to focus on areas of expertise, learn new skills, and avoid ventures where they might lack proficiency.
VidCon’s Unique Role
Sandman concludes the conversation by reflecting on the unique role VidCon plays as a converging point for creators, industry stakeholders, and fans. Unlike other conferences, VidCon facilitates networking and deal-making in an inclusive atmosphere, solidifying its reputation as a premier event in the influencer marketing world.
As the creator economy advances, the insights of industry veterans like Marshall Sandman illuminate the current landscape and its potential trajectory. VidCon serves as a pivotal platform for professionals to connect, collaborate, and seek new opportunities. Despite existing challenges, the creator economy remains an exciting and rewarding space where innovative strategies and investments can sculpt the landscape for years to come.