Social media is undergoing a seismic shift, with dozens of new apps and wide-eyed entrepreneurs hoping to solve the loneliness epidemic affecting Americans.
From apps like Retro that want to bring back the Instagram-like photo-sharing experience of yore to platforms that aim to connect people with similar interests in real life, founders are We want to create a slower environment to bring it back. on social media.
At the same time, investors, particularly venture capitalists, are showing little interest in the current market for consumer-focused startups and products. In January, for example, Connie Chan, who spent 12 years investing in consumer technology at A16z, signaled she was leaving the company to focus on B2B startups and AI. That same month, The Information reported that venture capitalists have “given up” on betting their careers on consumer investments such as social media.
However, there are still some investors who do not agree with this.
“We remain more bullish than ever,” Maitri Melbana Parekh, principal at Aklu Capital, told Business Insider. “We're entering a new wave of social, and people are getting back to what they're actually using these platforms for in the first place: connecting.”
And Peter Boyce II, founder and managing partner of Stellation Capital, dismisses the trend of VCs turning to consumer investing as part of a broader “rise and fall” in the space.
But the consumer social space is tough for investors and startups alike.
“It's hard to underwrite anything on the consumer side these days because you don't have visibility into the revenue and everything else that flows underneath,” said Marlon Nichols of MaC Venture Capital.
But he said there are certainly “some gaps” in the broader market that could present opportunities for VCs.
Several new social enterprises have secured funding, albeit on a smaller scale than in previous years.
IRL social app 222 announced a $2.5 million seed round in February with participation from 1517 Fund, General Catalyst, Best Nights VC and others. Web3's social media platform Seam Social also announced a $2.5 million seed in late 2023 led by Web3 and crypto investment firm 1kx. And Kndrd, another of his IRL social startups still in beta stage, recently collected his first $10,000 check from the Stanford University BASES Startup Challenge.
Here are seven VCs you should know who are currently investing in emerging social startups.
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1kx. Peter, known online as @pet3rpan, is a VC fund focused on early-stage cryptocurrencies and his Web3, with offices around the world including San Francisco, New York, and Lisbon.He is the designated consumer of 1kx. I'm a technology investor. The company has invested in startups such as Joke Race, Pudgy Penguins, and Seam. The size of the fund is not disclosed.
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Acru Capital. Mervana Parekh is the principal of Acrew, which has invested in social startups such as Diem, Afterparty, and Anything World. The company is based in San Francisco and has a fund of $1 billion in assets under management, according to the company.
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Best Knights VC. Laurent de Silva is managing director of Best Nights, the VC arm of alcoholic beverage company Jagermeister, which has invested in startups such as 222, Rex and Thursday. The Berlin-based company did not disclose the size of the fund. Write checks ranging from $300,000 to $1 million.
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Crash Ventures. Andrew Kahn heads Crush Ventures, a venture capital firm founded by global talent management company Clash Music, whose clients include music giants Miley Cyrus, Lorde and Fall Out Boy. It will be done. Kahn, along with investors Aaron Matusow and Dan Kruchkow, has invested in startups such as Rhythm and Cove. The company has offices in Los Angeles and New York, and the fund size is $30 million, the company said.
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Mac Venture Capital. Mr. Nichols is a founding managing partner of MaC and has recently invested in social startups including Spill and Swsh. Although the company has made some efforts in the social market recently, Nichols emphasizes that MaC is not targeting social as a category alone. The Los Angeles-based firm says Fund II has a total value of $203 million.
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Scribble Ventures. Scribble has three major investors focused on consumer social companies like photo-sharing app Retro. Elizabeth Weil (Founder and Partner), Kevin Weil (Resident Operator), and John Smothers (Partner). The San Francisco-based firm says it invests from two funds: a $56 million early-stage core fund and a $30 million opportunity fund.
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Stellation Capital. Founded by Boyce, who spent eight years investing in consumer startups as a partner at VC firm General Catalyst, Stelation is a New York-based pre-seed and seed-stage company. Boyce, along with associate Leanne Houghton, has supported a number of new social startups including Diem, Lex, Koodos Labs, and Swsh. According to the company, Stellation's current funds have total assets under management of $90 million.
What will make social startups attractive to VCs in 2024?
The founders behind many of the newest and hottest social networks are often Generation Z, former staffers at big tech companies, and are far more diverse than the generation of founders who built Facebook, Snapchat, and Twitter .
“The things that will define how we communicate and behave for the next 10 years are being invented right now, and they are being invented by young people themselves,” Boyce said.
Andrew Kahn, who heads Crush Ventures, said the company considers which founders have “the right unfair advantage around them to go to market at scale.”
“The future of social media is in closed, collaborative and interactive spaces,” Khan said. “He's not necessarily broadcasting one-to-many. In a place like this, you're interacting around a shared experience, co-creating, co-playing, co-listening.”
For example, in 2022, Crush Ventures invested in Rythm, a music streaming platform that allows users to listen to and share music online.
Leveraging technology to create engaging IRL experiences is the guiding principle of Best Nights. Best Nights aims to fund startups that can provide users with the “best night.” Best Nights invested in 222. Lex, an app for the queer community to connect. And thursday is a dating app that invites users to events held on Thursdays.
“We're looking for scalable consumer technology startups that follow an online-to-offline approach,” Best Nights' De Silva said. “This means you have to onboard people online first, you have to gather people online, but they come together offline and participate in something that leverages technology.”
De Silva said Best Nights is looking to invest in companies that facilitate travel experiences in 2024 after hearing people say they had the best nights out while traveling and vacationing.
“Post-pandemic, there will always be an awareness and recognition of how precious time spent in person with other people is,” Boyce agreed, adding that he believes it's important for people like Diem and Rex to He said that's why he invests in startups.
Melvana Parekh said Acrew is also looking for startups that can effectively bridge online and offline experiences at scale.
For other companies like MaC, promising social investments must fill gaps in the product market and show signs of being winners in their respective areas of the Internet.
“Founders have to be honest with themselves,” Nichols says. “Some of them aren't really venture-scale or venture-type investments. We're looking for the next big thing, the next category leader.”
