Could the next phase of influencer equity offer influencers real equity in the brands they work with? Influencers have long played the role of brand ambassadors, partners, event attendees, spokespersons, and more. But lately, they’ve taken on a new title when it comes to their work with emerging brands: investor. With a renewed focus on creator credibility, influencer pay equity, long-term partnerships, and increased access to opportunity, this may well be the next step in the evolution of the brand + influencer relationship.
Influencers have provided all kinds of value to brands, helping them speak directly to consumers, reach a wider audience, and increase sales and revenue. But aside from celebrities like Ashton Kutcher and a few star TikTok investors (much to the dismay of many mainstream VCs), influencers have never been considered investment opportunities.
Typically, the relationship between influencer and brand looks like this: brands pay influencers, influencers provide content, brand approves content, influencer and brand post content, deal done . Then a brand continues to grow, gain users, increase downloads, and potentially be acquired, in part because of what the influencer content has provided.
There is also an investment gap. Of the 14 million accredited investors in the United States (influencers and individuals), 300,000 are angel investors. Only 22% of these investors are women.
Stéphanie Cartin created both SocialFly, a digital marketing agency, and Entreprenista, a community for female founders. For more than a decade, she’s seen the impact influencers have had on the explosion of brands – on the influencer side, the brand side, and the founder side. For her, all these problems could be solved by democratizing the act of investing.
Founded by Cartin and three other women, Pearl Capital wants to encourage more women (influencers and ordinary people) to consider themselves as potential investors. They want to help influencers play a bigger role in growing emerging brands while engaging them to normalize what investing looks like among their followers.
Pearl Capital’s model allows accredited investors to contribute as little as $5,000 to an SPV (special purpose vehicle), a fund that pools their investments to create an LLC that will become a singular investment in a business. They hope that by lowering the entry point and providing transparency, education and a clear window into the process, they will inspire a new class of investors.
I spoke to two of the four founders, Stephanie Cartin and Alyssa Arnold, about this model and why they think it’s important for women to diversify their portfolio beyond just the stock market.
Amy Shoenthal: Tell me about each of your journeys and how you came together to create Pearl Capital.
Alyssa Arnold: I am an engineer, so my background is very different from that of an influencer, but I really wanted to invest in something other than the stock market. I did some venture capital work and then realized I really wanted to be an angel investor. So I started looking for different ways to invest in businesses. I was surprised that there seems to be very little there.
Steph (Cartin) and I started talking about the difficulty of finding investment opportunities. It turns out that 55% of angel investors are former founders. We thought it should be a lot easier, so we wanted to find a way to help women feel empowered to invest and diversify their portfolio outside of the stock market or real estate or some other more traditional avenue.
Next, we started looking at the intersection of influencers and the effects they have on brands. It was fascinating that they weren’t really able to invest in brands early on, if at all. We solved all these problems by creating Pearl Capital.
Stephanie Cardin: We know how difficult it is to fund businesses founded by women. There’s a lot of access control, and unless you’re already in that world, it’s extremely difficult.
I run an agency called SocialFly where we run influencer campaigns on behalf of our clients. These influencers get $500 here, $5,000 there, sometimes they even get paid in products. But these influencer campaigns can often blow these brands away. Then, when the company sells or goes public, the influencer who was partly responsible for that success has little to show for it.
That’s why we started thinking, what if there was a way to bring these influencers together with founders who are raising capital? This would encourage them to keep posting and sharing about the brand because they are financially invested in it, which makes it even more authentic.
We want to reach the many women who are accredited investors but simply haven’t had access to offers or training to get started. We can help founders who have struggled to raise capital. Moreover, with our model, the activation of marketing and influencers is partially integrated.
Courtney Spritzer, our third co-founder, is my business partner in SocialFly and Entreprenista. Our fourth co-founder, Ingrid Zapata Read, created a community called Working Mom Kind. When Ingrid posts about one of our brands, the number of users increases, app downloads increase, and we realized that she really should be able to have a stake in the business.
Arnold: Also, when you start fundraising, having 20 influencers on your cap table is extremely powerful. We focus on the power of the group, not the individual. The minimum investment is $5,000. This is significant but small money compared to VCs.
Shoenthal: Do you set specific criteria for influencers? How to define an influencer?
Arnold: We try to meet influencers where they are, but we are also extremely enthusiastic about anyone who will want to defend the brands. The only requirement we have is that they be accredited investors. We need it for our SEC filings. But you can be influential even if you’re not on Instagram, even if you’re just a person telling your best friend about it.
Shoenthal: How does an SPV differ from a traditional VC or angel investment?
Arnold: From a business perspective, our SPV is the same position as a fund. We collect everyone’s money in a specific LLC, and then that LLC invests directly in the business.
If I came in as an angel investor, I would just invest directly in the company and then have my own place at the cap table. This SPV is a cash pickup that is reported as a single post. So you don’t have the 20 people who invested in the SPV sitting at the ceiling table.
Influencers are one step ahead of the regular consumer to see which brands are about to explode. They can see what will increase up to 10 times their income. We want it to work in their favor. Influencers also normalize investing with this model. It’s access to wealth but it’s also education and normalization of these types of investments. They build trust and authenticity.
Shoenthal: Interesting investments to come? Are there any names of influential investors you can share?
Arnold: We closed Bonjour Fête in June with 21 investors at $215,000. Markid closed in July, and Nomadica and Esker Beauty will open in mid-September. We have also just announced an investment opportunity for reproductive health company, Stix, which is now open.
cardboard: In terms of investor names, we are thrilled to have Jennifer Love Hewitt investing alongside us in Bonjour Fête and Shenae Grimes Beech investing in both Bonjour Fête and Markid. This validates our thesis that bringing together a community of influential investors and giving them the opportunity to invest side by side in brands they are passionate about and believe in will make them successful.
Shoenthal: How do you make money?
Arnold: We have no management fees. We don’t make money until the deal is done. But we will have a carryover of 20% on a stunt on the way out.
cardboard: There is a level of trust here. We truly believe in the brands we invest in. For us, it has to be a “hell yes” or it’s a no.