For YouTube millionaires Rhett & Link, VC is the creator future

Rhett McLaughlin and Link Neal are two of the most successful content creators in the social media market, with their long-running YouTube show “Good Mythical Morning” helping them earn $30 million in 2022 — the fourth-most among YouTubers, according to Forbes.

As the creator economy surpasses $100 billion in value with more than 300 million people taking part in it globally, according to a recent report, venture capitalists are recognizing individual creators as investment opportunities that tap into the sector’s potential. Those investors also include creators like McLaughlin and Neal.

“The right creators are good and investments,” said McLaughlin, who is co-CEO of Mythical Entertainment. “We are taking a very deep look at their business and their vision.”

McLaughlin and Neal have built out Mythical Entertainment, an internet-based entertainment studio that hosts “Good Mythical Morning” to include several other notable channels, including Mythical Kitchen, Smosh, and others. In total, the studio’s owned & operated YouTube channels have generated more than 27 billion lifetime views.

The pair chose to reinvest their earnings, and lessons from their experiences, in burgeoning creators through an accelerator fund.

“There’re lots of creators who want to build businesses bigger than themselves and they need to build the kinds of teams and systems that we did in order to accomplish those goals,” McLaughlin said. “We can bring that along with a direct investment and that’s what led to the creator accelerator.”

McLaughlin and Neal formed the $5 million fund in 2021 to make equity investments in other creators, while also providing partnerships and advice on how to create a lucrative business in the creator economy.

“The partnerships that we’re creating with the Mythical accelerator empower creators to make that turn,” said Neal. “We’ve been investing in ourselves for our whole lives. So we believe in creators because we believe in ourselves.”

McLaughlin and Neal are primarily focusing on YouTubers who are up and coming on the Alphabet-owned platform with long-term potential. Currently, they’ve made investments in two creators, commentator Jarvis Johnson and musician Daniel Thrasher. Their decision to invest in these creators comes from their shared vision of expanding to larger independent businesses.

“The thing you’ll see with both Jarvis and Daniel is that they can do multiple things. They both have a vision to grow their business and to lead their business,” McLaughlin said. “We want to invest in creators that can actually provide leadership for a team.”

Since joining the Mythical accelerator, Johnson has increased his view count by nearly 60 million on YouTube and Thrasher has expanded his music career from going on tour to starring in the upcoming Amazon Freevee show, “Dinner with the Parents.”

“I’m really excited about the track record that we’re building,” Neal said. “And we’ve got some more in the hopper.”

The accelerator fund itself may bring in outside investors at some point in the future, McLaughlin said, so it “could be amped up and super powered,” but those talks remain in what he described as an exploratory stage.

Creator economy holding companies

The team at Mythical is not alone in seeing the investment opportunity. VC firm Slow Ventures has also launched a creator fund and has taken a keen interest in the business of those in the creator economy.

“We saw this lack of access to capital in the same way that startups have a massively developed ecosystem for capital,” said Megan Lightcap, creator principal at Slow Ventures. “These creators, which are in many ways businesses, didn’t have the same access,” she said.

Slow Ventures’ fund invests anywhere from $100,000 to $5 million in creators in exchange for the rights to up to 10% of future creator earnings, but typical deals range from $500,000 to $2 million for up to 5% of future earnings.

One of the creators Slow has invested in is Youtuber Marina Mogilko, who immigrated to the U.S., to Silicon Valley specifically, from Russian in 2015. Mogilko has nearly nine million followers across platforms, posting content focused on her experiences since moving to the United States. Lightcap says she invested in Mogilko because she is a creator and an entrepreneur. Mogilko founded the company LinguaTrip, a language-learning platform that allows users to book courses to study the language in the country where it is spoken and enroll in foreign universities.

Providing creators like Mogilko with capital gives them the ability to grow quickly at a time when they can leverage their existing social media virality. While the fund is still new, it expects to generate high returns from these investments, Lightcap said, but she added there is no track record yet to highlight. “The return profile remains to be seen. But they are highly cash-generative,” Lightcap said. “Over a long enough period, you’re kind of making a bet that they build a company that ultimately sells.”

Lightcap says she is specifically drawn to creators who aim to build businesses around their content, rather than those who remain solely focused on gaining social media attention or increasing follower count. That’s key for many of these newer investments in the creator economy, deprioritizing the typical ways in which creators generate revenue, such as brand deals and video views. Many creators establish separate holding companies to manage the revenue generated from various sources. Slow invests in these holding companies and says it is up to the creators to make the decisions on how to use the capital.

Dylan Lemay’s equity model

Chris Camillo, co-founder of Dumb Money, a YouTube investing show, said the evolution of the creator economy has allowed VCs to help solve “a fairly critical problem” for venture investors, which is the cost of acquiring customers at scale. Camillo led a more than $1.5 million pre-launch seed round for a business by Dylan Lemay, a creator with more than 16 million followers across his social platforms.

Lemay, who originally became popular on TikTok after posting videos of himself working at Cold Stone Creamery, used the funding to launch a bricks-and-mortar ice cream shop in the NoHo neighborhood of Manhattan in July 2022.

Camillo says working with creators to start a separate independent business in which they can purchase equity is a better path to success than the holding company model being used by other creator funds, with one of the reasons being that it doesn’t present conflicts with the existing content business and revenue streams of a creator.

“You can’t just take a content creator and throw them a bunch of money and say go start a company,” Camillo said. “The purpose of the business entity is to extend that content creator into a new space that they’re not currently in.”

The growing attention that creators are gaining from investors comes at a time when investments in other startup sectors are seen as increasingly risky. And by providing substantial funding and support, these venture investors are underscoring the increasing synergy between creative talent and entrepreneurial success.

“It’s done so many things that we never could have imagined when we started this,” Lemay said. “It made me feel comfortable to do something like this and to take a big leap and dedicate years of my life to trying to start a business.”