By Jaideep Singh, CEO, FlyFin
Entrepreneurship is experiencing a boom. Driven mainly by the pandemic and spurred by the Great Resignation, people are starting their businesses in droves. The Labor Department’s Job Openings and Labor Turnover report from November 2021 reflected that a record 4.4 million U.S. workers have resigned. Labor Department data also reflected a 6% increase in self-employed people during the pandemic. Entrepreneurs applied for federal tax IDs to register 4.54 million new businesses from January through October 2021. Compared to 2019 Census Bureau data, this represented a 56% increase in new companies.
Today’s entrepreneurs starting a new business operate in a vastly different landscape than a few decades ago. One can only imagine the endless hurdles and costs — pre-Internet. Today, the Internet and social platforms (Facebook, Instagram, TikTok, YouTube, Snapchat, etc.) have reached a global scale. Mobile phone and app usage are also ubiquitous. Connecting to a global audience is affordable and readily available at everyone’s fingertips. According to MediaKix, an influencer marketing agency, by 2025, an estimated 4.41 billion people will be active on social media.
So Long ‘American Dream’: The Creator Economy Gives Rise to ‘The Global Dream’
With the birth of the creator economy, anyone with any skill, passion, talent, expertise, or hobby, from photography to singing to makeup artistry to fitness coach, can venture on their own and build a viable business. According to an Influencer Marketing Hub benchmark report, 43% of surveyed creators reported making a living wage from their work at $50k in annual income or higher.
SignalFire, an early-stage VC firm, and eMarketer, a market research firm, estimate that the creator economy comprises approximately 50 million ‘creators.’ Of the 50 million, about 2 million are professionals, producing content full-time via YouTube, TikTok, Instagram, and Twitch. Influencers now have an entire creator ecosystem that supports them from start to finish. Leveraging any global social platform as a starting point, creators can monetize their influence using various tools, including monetization platforms, influencer marketplaces, audience engagement platforms, sponsorship marketplaces, etc. MediaKix also estimates that influencer marketing’s total addressable market (TAM) is $8 billion and will grow to $15 billion this year.
Meanwhile, on the investment side, venture capital firms have invested $800 million in just 31 startups alone since October 2020, according to Influencer Marketing Hub. It estimates the total Creator Economy market size to be around $104.2 Billion and on par with a substantial growth trajectory similar to the Gig Economy. With its origins taking root around 2006, the Gig Economy is approximately $347 billion today and is expected to grow to $455.2 billion (USD) by 2023.
As mentioned earlier, the market landscape is abundant in supporting and enabling creators to build an audience and monetize their products and services quickly and for very little upfront investment. Here’s a preview of some digital platforms and service providers that serve as a central foundation to support and fuel the creator economy.
Monetization Tools: Substack, Gumroad, and Patreon provide platforms that enable creators to engage and monetize audiences and subscribers, supporting subscription tracking and payments, e-newsletters, podcasting, etc.
Freelance Job Marketplaces: Fiverr and Upwork are two leading sites that provide freelancers with an online place to showcase their skills and projects. The platforms offer efficiency in allowing companies to post projects for hire and freelancers that match the requirements to bid for the project. They provide safety and assurance to both parties in hiring talent that matches job or project requirements and ensuring payment for the project upon completion.
Influencer Tools: Like how Fiverr and Upwork offer their services, many marketplaces connect influencers and creators with leading brands and marketers to sell and secure content and engagement for campaigns. Brands can find a broad range of social influencers based on the vertical industry, from an Instagram fashion influencer to a YouTube travel influencer. Klear is an influencer marketing platform that helps brands with influencer discovery and management and enables influencers to showcase their social stats, personal brand, influence and brand campaigns. It boasts 900 million influencers across various categories and top social channels.
Fintech Apps for Creators and freelancers: a host of financial management services, from neo-banking to time tracking software, have surfaced to help the growing creator economy.
- Stir is a platform that helps freelancers and creators oversee their revenue cash flows, establish analytics, and share revenues, paying partners and collaborators. The platform provides freelancers and creators with essential financial management tools to run their business, from invoice creation to auto-payments to centralizing business analytics.
- Karat Financial extends credit and financial services to social influencers — TikTokers, live streamers, YouTubers, and other creators, carving out new careers in gaming and elsewhere. The credit card bases its credit limits on each cardholder’s ‘social stats.’ The average Karat cardholder boasts 1.8 million followers across social channels.
- FlyFin is a Man+Machine, AI-based tax engine that works in the background 24/7, 365 days per year, automatically scanning expense accounts daily to suggest which category to classify each expense based on a freelancer or creator’s profession. FlyFin’s approach is a game-changer in that it harnesses the power of AI with the expertise of CPAs who find all possible tax deductions. When income tax deadlines hit, the self-employed individual pushes a button; income tax and tax deductions get totaled, reviewed by a CPA, and the income tax filing gets submitted to Uncle Sam.
- MileIQ is ideal for freelancers, creators, and self-employed people who rely on their car for endless business-related trips, whether visiting a client, purchasing equipment for the business, or running to the bank, post office, or overnight delivery vendor. Tracking mileage expenses adds up quickly, especially with gas costing $5 per gallon in California and other regions. MileIQ makes mileage reimbursements and automated documentation a breeze for tax filing purposes.
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