Deal Details
Startup: Curastory
Security type: Crowd SAFE*
Discount: 0%
Valuation (cap): $9 million
Minimum investment: $250
Where to invest: Republic
Deadline: January 28, 2022
Video ads made by influencers are almost inescapable these days. Many of them try to direct viewers to take certain actions in subtle and not-so-subtle ways. How successful they are depends on two things: How many people follow the person in the video. And how much they trust that person.
This should be a gimme for the thousands of star athletes (yes, I said thousands) who have large and growing followings. They should be highly sought after by commercial brands and raking in the money.
But they’re not. Because the video advertising system is broken. And I mean completely broken. It’s hard for brands to find influencers that are a good match. It’s even harder for influencers to reach out to those brands. And if both sides do somehow hook up, brands have no way to track the results of their ads. But we do know that the results are usually not very good.
I NEVER click into the ads I see while watching various short videos. Why should I? They feature strangers. I don’t care about them. And I could give a fig about what they have to say.
I’m not alone. The latest data says that YouTube and Facebook Watch viewers skip these video ads 70% of the time.
And yet (rather incredibly!) $31 billion of digital video ad dollars pour into this ineffective system every year. That’s because brands understand it’s a powerful medium. And if they can just figure out how to unleash the intrinsic power and persuasiveness of video ads (or they just get lucky!), their sales could receive a major boost.
In other words, brands can’t afford to ignore this medium — but they overpay for underwhelming results when they do participate.
Curastory to the Rescue
Brooklyn-based startup Curastory is untangling this mess.
Curastory gives athletes and fitness creators easy-to-use tools to make, edit, publish, distribute and monetize videos. It’s free for creators/influencers. And brands no longer have to sift through thousands of videos to find influencers they like.
Curastory automatically matches brands to videos and creator audiences that are the best fit. The brand submits scripts with their campaigns for ads that will be embedded in creator videos. Once everything is done, a couple of clicks on Curastory’s platform helps the creator send the video with the embedded ad to all the social media channels where that creator enjoys large followings.
And get this. Brands only pay for the results, based on how many people view the ad. If the ad fails to draw views, the brand’s payment goes down accordingly.
Not every ad is successful. But overall, Curastory significantly increases ad views. Viewers are much more willing to click on an embedded ad done by the same person whose video they’ve enthusiastically tuned in to. The results speak for themselves. Brands make on average $2 to $3 for every dollar they spend.
And unlike much bigger companies or agencies in the video ad space (like Creative Artists Agency), Curastory actually tracks returns. Brands and creators alike know exactly how well the video has done. Brands only pay for what they get. And creators earn according to the number of views their ad generates. They earn an average of $5,000 per video. For student athletes who gladly make videos for fun, this is a windfall.
But make no mistake. For brands and the digital video ad space as a whole, this is BIG BUSINESS. Curastory has developed the tools, end-to-end infrastructure and AI to tap into a huge opportunity.
That alone gives it a high upside. But something completely unexpected happened a few months ago to make this opportunity much bigger than Curastory’s founder and CEO, Tiffany Kelly, ever imagined.
The NCAA Removes Its Shackles
Universities make BILLIONS of dollars off their student athletes. But the athletes have historically gotten a raw deal. In 2010, the NCAA (National Collegiate Athletic Association) signed a deal with CBS and Turner Broadcasting worth $10.8 billion over 14 years. That deal was for the NCAA basketball tournament alone! A small percentage of these athletes get a free ride that covers tuition and housing worth — oh, let’s say around $100,000.
Advantage: the universities.
To make this even less fair, the NCAA prevented students from making money on their name, image or likeness (often referred to as NIL). That crushed any possibility of students entering into remunerative merchandising or influencer deals.
This past July, that all changed.
The NCAA issued new guidance that allows students to engage in NIL activities so long as they are “consistent with the law of the state where the school is located” and allows students in states without NIL laws to participate without breaking NCAA rules.
Its impact was immediate.
On July 2, incoming freshman Tennessee State basketball player Hercy Miller signed a four-year, $2 million endorsement deal with Web Apps America.
While college football and basketball players will earn a lot of the NIL compensation, the student athlete expected to make the most money is LSU gymnast Olivia Dunne. Dunne has more than 5.7 million followers on TikTok and Instagram, making her the most followed student athlete on social media.
These new rules also stipulate that a platform cannot have a relationship with a school. And that puts Curastory at a definite advantage.
Many bigger companies have pre-existing relationships with schools. But Curastory doesn’t. Students can sign up on their own with Curastory. The NCAA has no problem with that and has approved its platform.
Practically overnight, some 400,000 student athletes became eligible to monetize through Curastory. Tiffany thinks half of these NCAA athletes will be doing videos. That’s 200,000 potential influencers with instant and engaged followings of various sizes. Curastory says it needs 7,000 signups to realize $100 million worth of platform-generated revenue. Curastory makes its money by taking a 30% cut.
It’s targeting brands in e-commerce sports, fitness, consumer packaged goods and health and wellness. On the creator side, it’s prioritizing athletes (both pro and college) whose videos average at least 100,000 views. But it’s also accepting athletes who average 10,000 to 100,000 views per video. Right now, the platform hosts 200 to 250 active athlete creators/influencers. Some 100 of them are recent student athlete signups.
That number should grow rapidly through partnerships Curastory is making with the NBA Players Association and others. And it’ll be going on its first recruitment roadshow next May. If all goes according to plan, it projects platform-generated revenue of more than $1 million this year and more than $10 million in 2022.
There’s no guarantees here, of course. Among other things, the platform has to be capable of scaling. And Curastory must not only push growth but also balance that growth on both sides of the platform — brands on one side and creators/influencers on the other. That won’t be easy.
It’s early. But right now things are looking great. Curastory’s platform removes the vast majority of pain points for both brands and creators. The monetization strategy is solid. As a former analytics specialist at ESPN, Tiffany has provided outstanding leadership. Getting the cooperation of the NBA Players Association and NCAA at this early stage is a major accomplishment. She’s brought the company a long way on a very tight budget. It doesn’t get any easier, but she’s earned my trust.
This company looks like it’s going places.
How to Invest
Curastory is raising up to $535,000 on Republic. If you don’t already have a Republic account, you can sign up for one here.
Once you verify your account and are logged in to Republic, visit the Curastory deal page.
Then click the blue “Invest in Curastory” button. Enter the amount you want to invest, starting as low as $250, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
*NOTE: The security you will be investing in is a Crowd SAFE. A SAFE is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date in connection with a specific event. The Crowd SAFE is a modified SAFE that is better suited for crowdfunding.
Risks
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. Curastory might need to raise another round of funding in a year or two, if not sooner.
If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies. The investment you’re making is NOT liquid.
Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe Curastory offers an attractive risk-reward ratio.