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Creator economy founders spar as Gumroad raises $5M

In less than 24 hours, creator marketplace Gumroad raised $5 million from unaccredited investors at a $100 million valuation.

Gumroad listed its round on the crowdfunding service Republic, allowing anyone willing to spend more than $100 to own a part of the company. Gumroad offered 6 percent ownership through the funding campaign.

Cue drama: Another prominent founder in the creator economy, ConvertKit CEO Nathan Barry, voiced his concerns via Twitter.

Gumroad critiques: Nathan — whose company serves the creator economy with audience building and email marketing tools — criticized Gumroad for its management and cautioned people interested in backing the company.

Nathan said that “the team that originally built Gumroad doesn't have equity” and that would-be investors should be wary of a company that doesn’t take care of its creators:

If you don't take care of the creators you serve, or the creators who built the product, it's hypocritical to ask a new batch of creators to invest in your platform.

Tapping a new rule: Gumroad is among the first U.S. companies to leverage a new law from the Securities and Exchange Commission that allows them to raise up to $5 million a year via crowdfunding. Sahil told Techcrunch that the new rule may change how Gumroad raises capital in the future. Platforms that are poised to capitalize on the rule change include Republic, Start Engine, WeFunder, and SeedInvest.

Gumroad 101: Gumroad is a platform on which creators — artists, developers, designers, musicians, educators, storytellers, and more — can sell their work. Users can sell to fans via downloads, email newsletters, Gumroad integrations on websites and social media, and affiliate sales. Sahil founded the company in 2011.

Gumroad by the numbers: Gumroad has raised more than $8 million to date and earned $9.2 million in 2020 revenue, up 87 percent from 2019. The company also broke the seven-figure mark in 2020, netting $1.08 million, an increase of 286 percent from 2019.

Creators on Gumroad have sold more than $418 million of products since 2011. And in 2020 alone the company processed $143.8 million in creators’ sales on Gumroad.

Competitive creator economy: As the ubiquity and growth of the creator economy expand, more companies — like Substack, Patreon, OnlyFans, Twitch, and more — are vying to serve a market of ever-growing creators. And as more companies enter the estimated $10 billion creator economy, their success will shape the norms, culture, and expectations of the creator economy.

While spats between founders serving the creator economy — like that of Nathan and Sahil — may be rare, there is certain to be jostling for what values will define the creator economy. Creators’ and their fans’ dollars, however, will be the ultimate deciders.

posted to
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Indie Economy
on March 17, 2021
  1. 3

    Yeah, this read like a Clubhouse marketing stunt to me.

    I could be wrong, but half way through one of them was like, "you want to hop on Clubhouse to sort this out?"

    Pure kayfabe.

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