Exploring The Rising Creator Economy With Scott Van den Berg Of HotStart VC

Scott Kelly chats with Scott Van den Berg of HotStart VC and their angel investments in celebrity-founded brands in today’s rising creator economy. He shares how they choose the founders to work with and the innovative services they provide them. Scott also explains how involved celebrities are in building, running, and maintaining their brands.

—

Watch the episode here

Listen to the Podcast here

Exploring The Rising Creator Economy With Scott Van den Berg Of HotStart VC

Scott, HotStart VC, really cool model, celebrity-based.

It’s really awesome. It’s a trend that’s been going on for a while, but he’s really taking advantage of it. You’re finding obviously all kinds of celebrities and influencers getting into investing in early stage and either making individual angel investments or starting their own companies. This is really what Scott has been focused on, working with these influencers and these celebrity brands and investing in those brands. The reality is, in a lot of cases, they’ll have a great product, but then they have their own marketing and PR engine built in.

I’ve been saying this for many years. Any celebrity that didn’t head into their own products actually was making so little money. It was unbelievable the amount of work they would put in for somebody else’s brand, but when you start to expand that and use your celebrity for your own purposes and your own products that you can believe in, it’s less risk for you because you can believe in those products. They’re going to turn out to good. They’re not going to make sure lips swell up or something, as I think happened to one of the Kardashians at one point.

You’ve got Jessica Alba who had a great product and exit that went on with that. Selena Gomez has just done fantastic with her beauty products and makes more money than she does as an entertainer. How could that not be good? I think Scott Van den Berg and HotStart VC really has hit on something that they are specifically looking for, rather than, I just met this celebrity and so I did decide to invest. They’re out there specializing in that influencer capital.

I think the reality is these influencers are now not just endorsing any product that pays them, they’re endorsing products that they believe in and they believe enough to create a business and a brand around it. That’s what Scott is investing in.

We got Scott Van den Berg. He’s a 3 times Founder, 1-time exit, the Founder of Influencer Capital. The company is called HotStart VC, the investment fund. It’s an organization that structures equity deals between startups and celebrities, that’s Influencer Capital, which was an Angel syndicate that invested in celebrity funded brands. He’s got all of these different views of it. Celebrities founded equity structures between startups and celebrities on an influencer level, and now he’s looking at that as the bigger picture with HotStart VC.

I’m honored to have Scott Van den Berg of HotStart VC and Influencer Capital. Scott, welcome to the show.

Thank you so much for having me.

Introducing Scott Van den Berg of HotStart VC

Scott, obviously, I’m really excited about talking about your thesis in a couple of minutes, but tell me about your background. Tell us about what you did before you got into this business.

It’s funny because ever since I was sixteen years old, I already knew that I wanted to become a venture capitalist, but my path to getting there was definitely not linear. At age eighteen, I started my first company that was like an eCommerce company and then I did a bunch of other things. Eventually, in 2019, the Dutch government asked if I wanted to move to Silicon Valley to help them set up an organization that was basically helping European starters to move from Europe to Silicon Valley because there’s just a much more interesting market with a lot more resources.

I did, and I started to work with a lot of innovative companies, mainly like tech, but also some consumer startups. At the same time, I actually saw this first wave of celebrities launching their own brands. These were often like a peculiar brand, a beauty brand, an apparel company. I never understood why they weren’t launching tech companies or doing some very innovative stuff.

I started actually to reach out to a couple of smaller Dutch celebrity friends that I have asking them the question like, “Have you thought about launching your own company before?” To my surprise, not a lot of them were thinking about it. If they were thinking about it, they were actually thinking also about a tequila brand an apparel company or beauty brand like products in oversaturated markets.

I was showcasing them a couple of the startups that I was working with, asking them the question like, “Wouldn’t you be interested in doing an equity deal with a company like this so you can just focus on what you do best and that is creating content and basically helping them with engagement and awareness and the brand basically does everything about the operation and scaling the brand?”

They were like, “Is that possible?” I was like, “Of course that’s possible.” I started to work with a couple of these smaller Dutch celebrities, helping them do equity deals with startups, and that actually turned into a company called Influence Capital, where we basically structure equity deals between startups and celebrities.

That immediately scaled to the United States and like 99% of what we do is focused on the US. Through that work, I started to build like a lot of relationships with celebrities and creators and their teams. What has been interesting is that a lot of them started to invite me to become an angel investor in a company as they enjoyed working with me. They decided I was adding value to them.

I started to make like angel investments and brands of people like well-known celebrities like Selena Gomez, DJ Khaled, Jake Paul but also some more open and common content creators and celebrities. All of a sudden, I had a lot of like people in my network reaching out saying, “Scott, I have money but I don’t have access to these deals. Is there basically a way that I can co-invest with you?” That started with like smaller LPs that I put together, but then all of a sudden, I was managing like a community of 500 LPs and I was like, “Why don’t I actually turn this into a fund?” That’s how HotStart VC was born, where we now are able to write larger tickets in this thesis.

Working With Celebrity-Founded Brands

Share about your thesis at HotStart VC. Tell us what are you investing in, how do you invest, what’s a typical check size and let’s share a little bit about the fund itself.

Yeah, so HotStart VC is a new fund that invest in brands founded by celebrities and creators. What you see in today’s world is that we learn about new products and services from the people that we follow online. Not anymore from billboards or from TV ads or whatsoever. What has been interesting is that they have started to build their own audiences online and are now creating businesses on top of it.

It all has to do with their competitive advantage in company building. As they have built an audience, they can basically drive near instant traction to their companies for free by simply posting something on their social media channels. That is something that traditional consumer brands have to pay millions of dollars for.

It’s not only that building audience, but it also has to do with getting into retail, like distribution PR, fundraising and all these stuff like celebrities can basically open doors that you simply cannot. This already resulted in companies like Skims by Kim Kardashian, Fenty by Riana, Prime by Logan Paul and KSI and many more seeing growth that traditional consumer brands have never seen before.

We believe that this is just the beginning. We are investing up to $500,000 into these brands. We are sector agnostic. We like to invest early, though, so like pre-seed and seed. We have a portfolio construction of twenty companies. We believe that, as mentioned before, now a second wave of celebrity founded brands are being launched. It’s not anymore about launching products in oversaturated markets, but it’s actually about launching innovative products and services that solve real customer problems.

That could also be involving like technology or patented products or whatsoever. Those are the types of companies that we are excited about and we also believe that we can add value to because our team actually has been involved in 55 celebrity founded brands, including co-founding some of the most successful ones.

One of my venture partners, he co-founded Feastables, the chocolate bar company of Mr. Beast, which is like doing $400 million in revenue in the second year of business. It’s one of the fastest growing celebrity founder brands ever. Another venture partner of mine co-founded the Honest Company together with Jessica Alba, which IPO-ed in 2021, one of the only celebrity founder brands ever to IPO. We believe that we can share our learnings working together with these celebrities, turning their companies into billion-dollar brands and hopefully replicating the same successes for our portfolio companies.

Obviously, celebrities have been endorsing products for a long time and now they’re endorsing their own companies and their own brands. How active are they in these brands? Are they simply just putting their name on it? How active are they involved in the day-to-day management, the finances and things of that nature?

There’s no one size fits all. Every deal is obviously a little bit different, but this is actually one of the criteria that we always look for. We call this like celebrity skin in the game because sometimes we are being approached by a founder and they say, “This is celebrity-backed,” and they actually look on the cap table and you see that like a smaller celebrity put in like a $5,000 check in the early days and that’s it. I’m like, “That’s defined as celebrity bag nowadays.”

We perform a lot of due diligence and we like actually brands that have celebrities involved with larger equity stakes, so at least like a 10% equity stake actually involved. We’ve seen a direct correlation between the equity stake that they have and the success stories. That’s why in companies like Skims, Fenty and Prime, these celebrities have large equity stakes because they’re really leaning in. We have seen everything, all the way from a 0.5% equity stake to someone who owns like 80% of the business.

Obviously, they’re bringing in their celebrity, they’re bringing their recognition, their social influence. How do you help them fill the rest of the management team? Having a great brand and instant marketing is great, but obviously you need other functions in a corporation. How do you get involved in helping them build the rest of the team?

Team is obviously very important. It’s great to have a celebrity on board, but that person is probably not going to be answering the emails and picking up the phone to talk about the retailer and that type of stuff. You need an experienced team of operators will also have skin in the game. Not just being paid, but actually having equity stakes and being incentivized to grow the business along who are actually full-time on it.

You now see a new model arising a venture studio model where people are trying to replicate hundreds of successful companies with celebrities. We don’t really think that’s the way to go. You need like a passionate, dedicated team of founders who’s actually willing to put in the work and are only focusing on making this a success.

Exciting Up-And-Coming Brands With Celebrities

You just talked about some big-name success stories. How about some success stories? Maybe break some news on some companies that are with up-and-coming brands with up-and-coming celebrities. Anything you’re working on there?

One cool portfolio company of mine that I really love is a company called Fire. It’s a live fire cooking brand. They sell their own patented grills, proficient, fuels apparel, you name it. It’s co-founded of one of the largest barbecue content creator creators. His name is Derek Wolf. He has about 9 million followers across social media, but here comes the interesting part. He has onboarded twenty of the other largest barbecue content creators to come on board as equity partners. Now they own it together.

Imagine now 21 of the largest barbecue content creators leveraging their experiences, creating on every single piece of equipment out there and now creating their better version of it. I think that’s going to be an amazing brand, but they’re still early, but they were already able to generate like more than seven figures in revenue in the first couple of months. They’re also really tapping into the crowd. They did like a crowdfunding round pre-market and were able to raise like $40,000. They also did like a Kickstarter and were able to sell high six figures in grills and really showcasing the power of the community.

Scott’s Current And Ideal LPs

Talking about obviously people that you were investing in, let’s talk about people that would be interested in investing in a HotStart VC. Talk to me about who are your LPs now and what would be an ideal LP or an investor in your fund now?

We’ve seen the most successes with three types of LPs. Obviously, as a first-time fund, we don’t really have an established track record that we can leverage, so we really need people to buy into the thesis. We obviously have a very deep expertise and access in the space as we already have these working relationships with celebrities in that type of stuff.

The three personas are family offices and high net worth individuals. Those are two who are excited about the space. They’re interested in potentially co-investing with us directly into the portfolio companies in the CPG space, consumer space, media space, entertainment space. I think the exciting one is that we also are talking to celebrities about onboarding them s LPs and our pitch also resonates quite well with them because they have money and they’re being advised to invest in the real estate market and S&P 500, but they don’t really have an affinity to it. Now they’re actually have an opportunity to invest indirectly in companies that are founded by their peers. We see that that actually is exciting for them.

Why Choose HotStart VC

I like to ask this question to everybody we talk to. There are 3,200 plus venture capital funds out there, 1,800 fund one. Why your fund and why now?

What you see is that public influence and trust has evolved over time. In the past, it was all about institutions, then it’s shifted to corporations. In today’s world, it’s all about individuals. Individuals were often like creators and celebrities online. They’re the new power centers and culture business and beyond. Just look at the recent elections and seeing how powerful podcasters were in getting someone elected in the most powerful country in the world.

It’s hard to deny the power of this creator economy. I always say it’s not the creator economy anymore, it’s the economy. As mentioned before, we are not looking at our information at billboards or TV ads anymore. We are actually getting that information from creators, from individuals. Also, if you ask to the next generation, what do they want to become when they’re old? In the past, it was all about, “I want to become a lawyer or an astronaut.” It shifted to, “I want to become the next Bill Gates,” but 57% of the people of twelve years old and below now say, “I want to become an influencer or youtuber.” This is the future and this is going to happen whether we like it or not.

It’s funny you say that. Both of my boys a little bit older now. One of them, at twelve years old, thought he was just going to be famous on Discord and be an influencer in video gaming. Obviously, he did not accomplish that goal, but he’s doing great on his own. Even several years ago, I taught at the university level. I taught an entrepreneurship class and we polled the students in my class about what they deemed an entrepreneur was.

Final Words Of Wisdom And Episode Wrap-up

Over a third used the word influencer in their description of what entrepreneur is. It’s really interesting you talk about that. That’s definitely the trend going forward. What else do you want to share with the readers here? Whether they are brands looking to build a company and the celebrities, lps looking to invest in funds or companies looking to pitch you, what are some final thoughts you want to share with them?

I’m just very Buddhist on the space, as mentioned. Although we are still very early in this space, like the word influencer didn’t even exist a few years ago. This is a completely different market and the infrastructure has still to be built for a lot of these creators and celebrities to launch successful companies because for every Skims, Fenty and Prime, there’s hundreds of failures. I’m just excited to be working alongside next generation of these celebrities and creators that are actually coming up with innovative products and services that solve customer problems and work together with them to launch the next iconic consumer brands.

Scott, where can they people learn more about yourself and HotStart VC?

I create a lot of content online about celebrity founder brands. I became a content creator myself, so I can definitely recommend people to follow me on LinkedIn. That’s why I share daily news about celebrities, like new brands they’re launching, equity deals, what works, what doesn’t work. If people have questions or would like to talk more about it, feel free also to reach out to Scott@HotStart.vc.

Scott, thanks for being on the show.

I appreciate it. Thank you for having me.

—

I know you’ve been a fan of these influencer marketing. You’ve done a lot of work with them. We interviewed out of Utah a whole group that had built around products and influencer posting of those products. There’s this tie in for that. What do you think? Do you think they’re onto something here?

Absolutely. It’s interesting you mentioned Utah. That was the folks at Spacestation. They have a whole syndicate of investors that are influencers, but Scott is taking this one step further. He’s actually working with these companies and building these brands. He’s working in all parts of the ecosystem between influencers, brands and companies and really combining the three.

I really also thought that the distribution advantage is such in their favor right now for the celebrities to succeed, but if they can’t get behind the product, like if it doesn’t resonate with that audience, they’re in trouble. That’s why it’s so much better for them to do their own.

Absolutely, because at the end of the day, fans can really understand if someone’s just pitching something for a buck. In this particular case, sure, they’re making money with their brand and with their audience, but they’re doing it with things they’re passionate about and things they’re actively involved in.

I read this article and I was horrified by it. It was in Wired magazine, but it was about how this influencer marketing group out of Washington, DC pedals and looks at influencers that can market concepts and ideas and polls that you might sign up for or sign anything that you might protest or something like that. That’s what they specialize in, of course, for the DC market. They termed that an authentic influencer was someone who you couldn’t tell was hawking something. They were so good at faking that they were hawking it. I was horrified by that because that’s not what these celebrities do. They can’t do it.

Absolutely right, because the reality is their fans know the difference. You can rate the best script and be the best actor on YouTube, they’re still going to see through that. They’re going to know at the end of the day, you may be doing this because you like the product, you stand behind the brand, but they know that you’re doing it to make a living. I think the reality is if you could just be honest and transparent about that, and it’s easy to be honest and transparent when you are endorsing something that you’re a part of that you believe in versus something you’re just getting paid for.

I think that the other part is, as an investor, you always want to know that they’re in it, that your startup founder is in it and there’s no way when their reputation is on the line that they’re not in it.

What Scott is getting with these influencers and the brands that he’s investing is that they’re getting a dedicated founder that is dedicated for a multitude of reasons. As you said, not only are they trying to obviously build a brand and make money doing it, but they’ve got a reputation they have to withhold because if the brand fails, the reputation fails. The reality is they’re doubly incentivized to be successful, which obviously can help the return for Scott in his portfolio.

The other thing that I thought was really great about Scott is that international perspective that he has because your movie might be popular here, but it’s also probably popular all over the world, and why shouldn’t that translate into product sales and growth and larger distribution channels?

Yes, he’s from Europe and he has European, as well as American influencer brands that he worked with. He can look at this from a global perspective, not just North America.

I think he’s carved a great niche and one that more companies should be looking at no matter what type of products they’re doing. Not just the consumer products, not just CPG. Scott, what do you have coming up? Who have you been interviewing lately? I want to tease everyone as to what’s coming.

I was pretty busy. I had four interviews in one week and we’ve got some really interesting interviews. We have a great interview with one of the top marketing agencies that turned into one of the top marketing venture capital firms coming up very soon. Actually, we interviewed both partners. We’ll have a week where we interview one partner and the other partner

Maybe we’ll have to do a two-parter in the same week, because that seems too good to pass up. Okay, we’ll have to plan that one in. I love that.

We’ve got a lot of specialty niche folks out there., the whole goal is just to get some of these great performing managers the recognition they deserve and the opportunity to get more people involved.

Everyone, if you read something great in this episode and you want to learn more about these emerging managers, then you got to go to emergingmanagerspodcast.com where you’ll be able to find this episode. All the details, the bios, the link backs, the ways to get to every one of the emerging managers we’ve been covering in the show already and the ones that are coming up. Don’t forget to subscribe as well. Thanks, everyone, for being here.

Important Links

• HotStart VC
• Scott Van den Berg
• Influencer Capital
• Scott Van den Berg’s Email
• Scott Van den Berg on Instagram