Every technology category has a mid-cycle moment — the point where the original thesis has proven out, the market has named the category, and the real question becomes which infrastructure layers are defensible at scale. The creator economy hit that moment sometime in 2023, and we've spent the past year trying to understand what the second chapter of the infrastructure buildout looks like.
The indicators of mid-cycle maturity are consistent across categories. The leading companies in each sub-segment are no longer fighting for category definition — they're competing for market share within defined categories. The incumbents have consolidated their position and the question for new entrants is where the gaps are. Valuations have normalized from the peak of the hype cycle to something more reflective of actual revenue multiples. And the first generation of infrastructure exits has provided data on what the category's return profile actually looks like.
All of these indicators are present in the creator economy in late 2024. The subscription platform category has consolidation leaders. The creator analytics category has established players. The financial infrastructure for creators has named companies in each sub-segment. The exits from Fund I and Fund II investments have provided real data on valuations and liquidity timelines. The category is maturing on schedule.
What mid-cycle means for our investment approach: the easy infrastructure bets are taken. The companies that were obvious investments in 2019 and 2020 — when the category was unnamed and the first-order infrastructure was being built — have been built and funded. The investment opportunities for Fund III are in the second-order infrastructure: the tools that enable the first-order infrastructure companies to scale, the adjacent categories that the initial infrastructure buildout created demand for, and the geographic markets where the first-order infrastructure doesn't yet exist.
The second-order infrastructure thesis: when a creator economy sub-category matures, it creates demand for the infrastructure that enables the mature category to operate at scale. Creator analytics matured, which created demand for creator attribution infrastructure. Creator subscription platforms matured, which created demand for creator-subscriber communication infrastructure. Direct creator commerce matured, which created demand for creator fulfillment infrastructure. The second-order investments are available now because the first-order companies proved the market.
We're in a good position to see these second-order opportunities. Having been in the category since before the first-order infrastructure existed, we have the category context to understand where the gaps are in the mature version of the market. That context is the core competitive advantage of a category-specialist fund at mid-cycle.