In yet more evidence that we are definitely, certainly, most absolutely not trapped in a speculative bubble, YouTube personality Jake Paul has announced he is launching a venture capital fund that will use his legions of followers to raise cash with a subscription model
Called the Anti Fund, it's hosted on the AngelList Venture platform as a “rolling fund,” essentially a subscription model where smaller commitments can be made over longer periods of time. Paul’s fund will allow subscribers to participate for a minimum of $25,000 per quarter and over a minimum period of 4 quarters. This is in contrast to the typical model where a larger commitment is handed over in full and the firm pulls from that pool of capital over time.
One key difference between rolling funds and venture capital funds is that the former can be structured as 506(c)s, meaning they can be advertised to the public; in other words, Paul’s millions of followers.
"I have followers are different reasons, and they want to be involved in what I'm doing," Paul told TechCrunch in an interview. "If they're involved in our fund, then that's more people rooting for us and our portfolio companies to win. We almost create this army that's pushing all of these companies forward."
TechCrunch reported the fund already has backers like Marc Andressen and Chris Dixon, venture capitalists from the Andreessen Horowitz firm. Putting aside the fact that it sounds like Paul is intentionally trying to foment the kind of directed retail exuberance that buoyed Gamestop stock, this isn’t his first attempt to use his huge following as leverage in the world of investing.
Four years ago, in 2017, Paul raised a $10 million fund named TGZ Capital. "Many startups are raising money every day at inflated valuations, yet most of them fail because of their inability to acquire users and engage with a broader audience," one slide deck posted to Twitter by reporter Taylor Lorenz reads. "TGZ solves this problem by providing capital to our portfolio companies and guaranteed exposure to large audiences."
According to decks obtained by Lorenz, TGZ Capital was pitched as a unique opportunity because it used the massive followings of Paul and two other influencers that together boasted an "internal network" of 80 million followers and an "external network" of 300 million followers. All this, the team argued, would be used to solve a massive "challenge" in VC world: firms “cannot guarantee user acquisition to their consumer facing startups," but a firm headed by a YouTube star just might. The current status of TGZ Capital is unclear. Crunchbase lists the firm as active but only shows seven investments with no activity since 2018, while Paul told TechCrunch that TGZ had invested in 15 companies.
Paul did not respond to Motherboard’s request for comment.
It shouldn't be a surprise that Paul is bringing out old wine in new skins; he has tried numerous different routes to monetizing his fans. Also in 2017 (a busy year for Paul), the influencer quietly launched Edfluence, a platform that amounted to countless videos teaching people how to become influencers. For a meager price of $7, you were taken to a page that asked for another $57 to watch videos that were roundly criticized as a scam. The website eventually shut down a year later, but not before trying to squeeze more money out of Paul's fanbase by advertising huge price cuts.
Paul relaunched and rebranded that failed venture in 2020, this time calling it the Financial Freedom Movement. In a cryptic tweet announcing its launch, Paul wrote that “our education system is worthless i’m fed up if I die i want to die having made a REAL difference on the world.” To that end, the new platform charged $19.99 upfront instead of $7, and went a step further: now you could purchase videos, individually or bundled in a package, for as much as $5,997.
There’s a long list of controversies surrounding Paul, ranging from saying various slurs, more dubious business ventures, alleged emotional abuse, COVID-19 denialism, and more, but all of that rarely gets between investors like Andreessen and piles of money.