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Illustration: Aïda Amer/Axios

Mat Sherman had several dozen paying subscribers for his online community and newsletter about early-stage startups when he decided to trade that recurring revenue for a cash advance of $4,000 via Pipe, he tells Axios.

Why it matters: As the content creation business matures, a spectrum of financing models are becoming available to these entrepreneurs, who are no longer forced to entirely bootstrap their work.

Non-dilutive financing: Creators with recurring revenue, such as paid subscriptions or established ad streams, can effectively get advances on their future earnings.

  • For newsletter writers, that recurring (and growing) revenue is not all that different from that of SaaS startups, which have been initial customers of platforms like Pipe, a marketplace where companies can sell their customer subscription contracts for upfront financing.
  • In fact, Pipe CEO Harry Hurst recently convinced Anthony Pompliano, a newsletter writer and cryptocurrency investor, to trade those paid subscriptions for a cash advance to further finance a bitcoin buying spree, Pompliano tells Axios.
  • Non-dilutive investors focused on these entrepreneurs have also emerged, such as Spotter, founded by former Machinima exec Aaron DeBevoise, which targets creators like YouTubers.
  • Even newsletter company Substack's own advances to select writers are predicated on the assumption they'll attract enough subscribers, and thus revenue, for the company to recoup that money (and in some cases, even more, as some writers have disappointedly realized).

Equity financing: On the other end of the spectrum are investors who see content creators as ventures themselves — with massive growth potential — and want a piece of the upside. In short: venture capital investing.

  • “We say ‘you’re a young creator. Maybe you have a couple of YouTube channels — you have a following. … We will buy 5% of everything you do for the next 10 to 30 years,’” Slow Ventures partner Sam Lessin, whose VC firm has carved out $20 million from its latest fund to back creators, tells Axios.
  • “I don’t even mind if most of them lose my money, as long as I invest in Jeff Bezos along the way," adds Lessin of his expectation that not all creators will ultimately strike it big or have lengthy careers. (You know, like most startups.)
  • Similarly, Creative Juice, a company building tools for content creators and co-founded by YouTube star Mr. Beast, recently announced it is setting aside $2 million to invest in YouTube creator channels. It plans to set up additional funds geared toward other types of creators, says CEO Sima Gandhi.

Between the lines: “I’m giving you $2 million to build your brand — that brand is why you’re able to make all these other deals,” explains Lessin of the reasoning for creators to sell equity in all their future endeavors to investors like him.

  • Of course, he admits investors like his firm will have to show their deals aren't exploitative or a net negative for the creators they're backing for this approach to be embraced by the industry.

The bottom line: It's clear that there's a lot of money to be made in content creation — and investors don't want to miss getting a piece of it.

Go deeper

Several states declare emergency over Colonial Pipeline shutdown

A sign warns consumers on the avaliability of gasoline at a RaceTrac gas station in Smyrna, Georgia, on May 11. The average national price of gasoline has risen to $2.985 a gallon, Bloomberg notes. Photo: Elijah Nouvelage/AFP via Getty Images

Reports of fuel shortages across the U.S. emerged on Tuesday as the national average for gasoline prices soared to its highest level since 2014 amid a key fuel pipeline shut down, per Bloomberg.

What's happening: Operator Colonial Pipeline aims to have service restored by the week's end following last Friday's ransomware attack that shut down some 5,500 miles of pipeline from Texas to New Jersey. The governors of Florida, Georgia, Virginia and North Carolina declared states of emergency Tuesday due to shortage concerns.

Reports: More than 100 Republicans threaten to form 3rd party over Trump

Former President Trump addressing the Conservative Political Action Conference in Orlando, Florida, in February. Photo: Joe Raedle/Getty Images

More than 100 Republicans will sign a letter Thursday threatening to create a third party if the GOP doesn't "break" with former President Trump, Reuters first reported.

Why it matters: Per Axios' Mike Allen and Jim VandeHei, Trump's grip on the GOP has gotten stronger since the Jan. 6 Capitol riot. The Republican Party's "allegiance to Trump" as he continues to make false claims about his 2020 election loss has "dismayed" the group, according to Reuters.

Updated 4 hours ago - World

In photos: Dozens dead as Israel and Hamas intensify aerial bombardments

People gather at the site of a collapsed building in the aftermath of Israeli air strikes on Gaza City on May 11. Photo: Mahmud Hams / AFP) (Photo by MAHMUD HAMS/AFP via Getty Images

At least 35 Palestinians and five Israelis have been killed as fighting between Israel's military and Hamas entered a third day, per Reuters.

The big picture: The worst aerial exchanges of fire between Israel and Hamas since 2014 come after escalating violence in Jerusalem that injured hundreds of Palestinians and several Israeli police officers during protests over the planned evictions of Palestinian families from their homes.

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