Investing in YouTube Creators w/ Sarah McNabb (GigaStar)

0:00We've talked with many creators who've been unhappy with the creator loan models out there that have put them in the positions where they could potentially lose control or lose rights to their channel or their channel or their channel or their channel channel. Saturday.

0:17Hey, Sara, welcome to the show. How are you? I'm great, Alessandro. Thank you for having me. Of course, of course. I'm very curious to talk about this topic today because it's the first time that we talk about investing in creators. And it's a topic that is still quite new, right? I would say, compared to many other things in the industry. So very curious to talk about that. But before we do that, could you please introduce yourself? And we do it in a way called the map. Basically, it's divided in three different sections. The mission. So basically, it is what do you aim to achieve with what you do, of course.

0:54Any achievements could be milestone in your life or career. And then the last one is the purpose. So why do you do what you do? I'm Sarah McNamchink, Marketing Officer at Gigastar. I've been in financial technology marketing for over 20 years, securities brokerage, trading software, and marketing agency spaces in Chicago. My mission in my career is to constantly learn and evolve and actively take calculated risks. Joining Gigastar has been a notable milestone for me. It allowed me to take my FinTech marketing experience and apply it to a platform that serves YouTube creators and investors. This is actually what Gigastar's mission is, to bring YouTube creators and investors together.

1:40I joined Gigastar in 2022, and I do what I do for a couple of different reasons. So this is the second company where I've worked with our brilliant CEO, Hazem Diwani. When he approached me with the Gigastar concept, I thought it was revolutionary. Everyone on the team is genuinely inspired by creators. This new generation is so courageous and innovative. It also helps. My husband's a full-time content creator. He's a podcaster. So the concept of helping creators succeed and thrive is very near and dear to my heart. So I definitely find purpose in helping creators. Fantastic. Thank you for that.

2:18It makes sense, especially if you have someone in your life that you understand very well, their position in that. So tell me a bit more about the system. So for anyone listening, how does it work? You go on Gigastar and you select an influencer or a code creator that you like, and then you say, I want to invest. Tell me a bit more about that. And is it primarily or is it only for YouTubers right now? It's just for YouTubers for now. We're really going to stay focused on that market for now. We do try and foster a win-win partnership between YouTube creators and investors. So we believe that YouTube creators deserve access to funding and strategic investors, just like traditional entrepreneurs do.

3:04Our SEC registered crowdfunding platform is called GigaStar Market, and it's where YouTubers can list a percentage of their YouTube channel's future revenue in a revenue share offering. so they can raise capital from a database of thousands of strategic investors who essentially become an army of promoters for them with skin in the game and so on the flip side investors can gain access to the creator economy which is just fast growing 250 billion dollar economy where they can share youtube revenue with creators so how it works is during a channel drop or an offering, investors can buy channel revenue tokens or CRTs, which digitally represent the revenue share securities of the YouTube channel.

3:55Ultimately, when the YouTube channel's revenue grows, creators and investors will have the potential to both earn or becoming partners in a shared journey. And so that's where we really believe that to be a win-win partnership. Is this like, you know, when we talk about, you know, investors, right? Is that for everyone? Is there like a minimum type of like a floor price? Do you have to be sort of like investor savvy when it comes to that? Is this something simple for everyone? I'm trying to, you know, understand who is the typical persona, right? That usually invests. Is it like the biggest fan of the creator they want to support, but also they believe so much in them that they also want somehow, you know, to get part of the price there?

4:39Is it like investors that instead are somehow curious about these and they're investing in different things and this is one of the other avenues? I'm curious to understand a bit more, what is the typical person that is using GigaStar? Yeah, so our investors must be age 18 or older. They don't have to be accredited investors or highfalutin investors. They can be average people. So anybody who's interested in supporting a creator, but also potentially having a return on their site too, can sign up for an account. It takes just a few minutes and then they can participate in any open offerings. As far as pricing goes, our offerings for each creator who has a drop, there's typically three tiers at different price points.

5:27And those tiers can range from, you know, the lowest tier can be$25 for a general revenue token all the way up to$1 ,600 for a revenue token. So we do make it so that it's accessible and we try and lower the barrier of entry so that anybody who's age 18 or over who accepts the risks of the investment has the opportunity to participate. And how are these YouTube creators using these funds? Is it like for, I don't know, like make their videos better to buy better, like, you know, quality cameras? It is to fund, I don't know, like maybe a travel or trip for work. Like, have you identified anything recurring on how they use these funds?

6:09Or do they just somehow, I don't know, like, again, see it as an investment, you know, from other people, right? These investors basically somehow helping them just to, I don't know, find either maybe, or maybe like helping in hiring someone for their team. Like, what are the things that they are usually used for? I love this. This is like the why, right? Why raise funds? Creators who list on our platform have a multitude of reasons as to why they would want to raise funds. Whether they're just starting out and want to purchase equipment, buy studio space, buy a house, pay off debt. They can use the funds raised on GigaStar Market however they need to that will sustain their career and sustain their life and allow them to do what they love.

6:57And we found that, you know, anybody can use FUDS, whether you're a beginner or you're in the late stage of your career. I mean, there's always a reason you can use FUDS regardless. And so this is an option that we've developed. We've talked with many creators who've been unhappy with the creator loan models out there that have put them in the positions where they could potentially lose control or lose rights to their channel or their channel content. For example, if they fail to pay on a creator loan for which their channel is collateral, jeopardize their entire career. We do not do that. We do not issue loans.

7:38We're not a fast cash option and we don't do licensing of back catalogs. Rather, we enable the creators to monetize future AdSense revenue while maintaining and having full control over their content and their channel and keeping 100 % of their brand deals and sponsorship revenue. So we only focus on monetizing YouTube revenue. So you said there are different plans that you can invest in. How do you calculate that? It is based on historical data of, let's say, AdSense, for instance, and also how transparent is that, right? Like, because if you want to invest in someone, I'm pretty sure that, I don't know, like, do they share transparently, like, the historical data from their AdSense with their investors?

8:22So to understand, like, is this the real value evaluation of this channel? Is this what to expect in terms of forecasting? You know, I'm trying to understand, you know, what is the, how is the pricing, you know, based on what, right? Absolutely. And it's a great question. And so on GigaServe Market, whenever a creator lists an offering, it's in one single page. But that page includes what can be considered like an offering memorandum. So we call it, it's called Form C. And that Form C includes lots and lots of information about the channel. it reveals, you know, they have to disclose the 12 months of revenue from which the valuation and the channel revenue token percentages in pricing is derived.

9:07So it's all laid out very transparently in their form C. Typically when we speak with creators, we will talk to them about their previous 12 months of YouTube revenue. We will verify the revenue. That's part of our due diligence is to make sure that we are setting up an offering that is legitimate privatized securities offering and doing a background. We do background checks and all of the things that are required by regulators to set them up. But all of the numbers are right there. And we encourage any investor to review them very carefully before making an investment in the creator's channel.

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10:28Do investors usually like based on your data so far in the past years, do they invest like all at once? Do they do it like every quarter? Is it something that, you know what, let me invest for this year? Can you tell me a bit more about that and any metrics like dollar amount that you can share, of course? So an offering, we call them a drop. We say creator drops. It's really an offering period. for which their revenue share securities are available to the public, that window is a minimum of 21 days. That's financial regulation so that investors can take their time, read through all of the materials, and make an educated decision whether they want to purchase or not.

11:09And so if you imagine there's a 21-day period in which a creator has an offering, an investor can go in and make a decision, and they would just need to choose which tier of token they'd like to purchase. Every single purchase comes with additional special perks from the creator, like access to a private Discord channel or getting a shout out on a video from the creator. But the investor would be able to just do it all digitally, put it in their cart, be able to pay for it in several different ways from credit card to ACH and so forth. And then once the offering closes at the end of minimum 21 days, the channel revenue tokens are minted by Gigastar Technologies and delivered to the investor.

11:58From there, after all the transactions settle, the investor receives an invitation to access the GigaStar portfolio. And that's where they would be able to track performance, track their CRTs, and track channel revenue and everything right there within the same ecosystem, so to speak. Do you have investors that primarily invest on one, two, like a few YouTubers? Or do you also have those that, let's almost call it like the S &P, right? Of YouTubers, right? Like, do you have anyone that, let's say, invests on 100, let's say, maybe 50, whatever, like a big chunk so that they try to even minimize, you know, risk and maximize things?

12:40I'm very curious to see if they really like only the ones that they really believe in or if they seriously like, you know, see that as an investor, right? where I want to minimize risk, I want to maximize opportunities out there. So we have both of the type of investors. Are you seeing more one of the other or should it be a bit of a mix? We've tried to design our solution so that the YouTube creators can earn hundreds, if not thousands of individual investors. We really don't want one investor coming in and statching up all of the channel revenue tokens and all of the revenue share securities for the creator.

13:17We want to make sure that that creator has that army of promoters. Because we believe if an investor is not familiar with the YouTube channel, but finds a compelling channel and believes in its growth and invests in it, they're going to watch the content. They're going to share the content. They're going to participate as an active follower of the channel, which can potentially help grow the channel. Earlier, you had asked, do the creators invite their fans? And that is absolutely something we encourage our creators to do, is to let their audience know, let their channel, their fans know about this opportunity so that they can participate and be part of this journey.

14:01Additionally, we have a growing database. We're about 15 ,000 investors at our database now who we notify every time there's a creator's drop goes live. We do have it set up so that ideally there will be a larger distribution of investors and not just two or three holding everything. I think it's very interesting when you say about becoming even more active because now you're part of it. It's your asset somehow, even if you just own a small part of it. But I like the idea that you're not just anymore a passive user watching the videos, but you want to help the channel getting better because if that grows, it means more revenue and therefore, right, you get your percentage in.

14:48So I like that idea as well. Yeah, and I can share some metrics too. So, I mean, Gigastar, we started in 2022. We launched our first job in mid-2020. Today, we've raised over$2.2 million for YouTube creators. We've added almost 15 ,000 investor accounts and we've distributed over$129 ,000 of YouTube revenue to the investors. We've got 12 creator offerings under our belt, and we're currently onboarding more creators. We also have a growing number of case studies or creator stories on our website at gigastar.io. Each creator has a different reason as to why they would want a list, but I can give one example.

15:30One case study is from a family channel called The Shlou Family. In June of 2023, that channel raised$56 ,700 on GigaStar Market with the goal of hiring more team members to increase video posting frequency from monthly to weekly. And in December, they shared on Discord that the channel's revenue had actually increased by 50 % shortly after hiring a team. And they shared a YouTube revenue graph reflecting a dramatic increasing revenue in November of 2023, which the channel managers attribute to their diligent video posting consistency after hiring, which was made possible after raising the money on GigaStar Market.

16:17And with the increase in YouTube channel revenue in November 2023, the December 2023 monthly YouTube revenue payout to investors increased as well in lockstep. We've been keeping track and have a lot more case studies for anyone interested in checking them out at gigastar.io. So unfortunately, financial regulations prohibit me from speaking in specific terms about any offering while it's currently open. So we do have live channel offerings open now on Gigastar Market. And you can see them by visiting gigastarmarket.io and clicking on Explore Drafts. Fantastic. No, very interesting. So we primarily talked today about this quite new concept of investing with YouTube, at least with some sort of health facilitation thanks to our platform.

17:10In addition to that, is there anything else that you believe could be not only necessarily on YouTube, but overall in the creator economy? Do you have any prediction about how it's going to change and also the evolution of it? because investing absolutely is part of it. But is there anything else that you think is either missing or something that could be done better? Something that you wish was there when we look at the creative economy? Again, it could be still on the investing or maybe anything else. But I'm very curious to hear, especially based on your experience now with this platform. Predictions are tough.

17:43Yeah, I know. I never would have predicted how quickly AI is evolving and weaving its way through everything. And with the fate of TikTok still kind of unknown, I think the creator economy is going to find it. YouTube is the most reliable rock that creators can cling to. On our side, our financial technology, particularly how we've integrated blockchain technology to help creators automate payouts to investors. By doing that, we have been able to lower the cost, lower the barrier to entry for regular individuals like anyone over 18 to participate in the creator economy. And I think it's just the tip of the iceberg in finding these ways to create more intimate partnerships between creators and individuals and creating more financial opportunities for both creators and investors to really, really be part of turning the wheel of the creator economy.

18:43Do you think that is also doable like in other social media? Because of course, you know, with YouTube, with the CPM model, right? We said it's a bit easier to either forecast based on historical data. And it's also a bit easier to manage, right? While on other platforms, it's more about, you know, brand deals or like, you know, some creator found that it's a bit difficult sometimes to understand, right? Every month, there is a lot of ups and downs. So again, focus on YouTube for sure. Are you also envisioning others or it's just too difficult because of the nature of other social media right now?

19:18So YouTube is our primary target right now. We have leadership team members who come from the YouTube creator space who have intimate knowledge and understand the plight of YouTube creators in a way that I think just makes it a lower hanging for us to be able to grab this first. I think in the future, it's certainly possible to incorporate other platforms, but we certainly want to master YouTube first. It makes sense. Sarah, anything else that you would like to add that I didn't ask you today that we didn't touch base on or maybe something that just popped in your mind? Any YouTube creators who are interested in listing an offering on GigaStar Market to raise money, they do have to meet a few different thresholds, but they're invited to apply for a draw at GigaStar.io.

20:09We, as a team, provide white glove onboarding to help set up creators' privatized securities offerings. We also provide marketing guidance, and we work very closely with creators. We want to be a long-term partner to them. We don't want to be overly transactional, one and done. We love creators genuinely. We want to be there for that in the long haul. And one of the things that we are looking forward to is our team is currently building what's called a secondary market. And in the secondary market, which is planning to launch at the end of 2024, there's further opportunity for the YouTube creators to potentially continue earning.

20:47Our future vision for this, for an active secondary market is that every time a Yashu creator's channel revenue tokens trade in our secondary market, that they will receive a fee each and every time their CRTs trade. And so we are really looking forward to launching that at the end of the year. The one thing when an investor invests in an offering is that because the CRTs are securities, they do have to hold on to them for 12 months before they're able to trade down in a secondary market. Very interesting. We're going to add a couple of links also in the description of the episode. So, you know, creators can go check it out.

21:23And the same also for investors. Sarah, thank you so much for joining me today, for sharing, you know, your knowledge and also all this process that it was very curious to hear. So thank you for that. Thank you so much. This was the Influence Factor by the Influencer Marketing Factory. And I'll see you next week.