Over the past few years, a specific type of gathering has increased in frequency in Sand Hill Road conference rooms. A familiar-looking person enters, most likely a publicist who is waiting in the car outside, and they are not come to make a movie pitch. They are there to discuss conditions of the contract. The venture investors seated on the other side of the table have discovered—sometimes the hard way—that they should not be written off.
Celebrities have always made investments in technology. The scale and intensity of it are novel. People treated Ashton Kutcher’s early involvement with this as a curiosity for years, viewing him as a well-known person experimenting with something unrelated. The returns then began to arrive. A million dollars was invested in Skype in 2009, eighteen months before to Microsoft’s acquisition, and the company’s worth increased. 2.5 million into Airbnb, which is currently valued at approximately 90 million. Uber began with half a million and has since expanded to over sixty million. Eventually, the topic shifted from celebrity to track record.
More than $200 million has been invested in artificial intelligence firms by Kutcher’s company, Sound Ventures. This is not the actions of someone who views tech investing as a pastime or a branding exercise. His stated approach is intriguing because it emphasizes founder communication just as much as product fundamentals. Apparently, his test is straightforward: can you convince me of the concept in this room right now? The reasoning for this is that a founder will find it difficult to recruit, generate money, and develop if they are unable to convince even one interested listener of their idea. Although pure financial analysts don’t always consider using it, it’s actually a good filter.
Serena Williams is an example of a distinct type of celebrity capital that may have had a greater structural influence on the ecosystem. Over half of the sixty-four businesses that Serena Ventures has supported were created by women, and nearly four-fifths were founded by members of underrepresented groups. Of those businesses, fourteen have become unicorns. That portfolio is accomplishing something that the industry as a whole has continuously failed to do in a funding environment where female-founded firms only received 2.1% of all venture capital in 2022. The proof of concept is there, but whether it scales or stays relatively special is still up for debate.
According to research from Esade Business School that has been making the rounds in venture capital circles, the celebrity effect can be measured in ways other than attention. Celebrity-backed startups outperform comparable businesses without it in terms of survival rates, web traffic, and revenue results. Olivia Wilde supporting a gut health biotech that she actually uses as a consumer is a very different proposition than a celebrity writing a check for a firm they hardly know. This is because the power of the effect is correlated with the investor’s personal connection to the product.
As this trend takes hold, there’s a sense that two types of cultural capital that once existed in different realms are truly coming together. Hollywood thrives on storytelling and the capacity to evoke strong emotions in viewers. At the seed and early stages, Silicon Valley operates on the same principle. When an entrepreneur pitches a business without any income, they are effectively asking investors to believe a narrative. Regardless of what else they have to offer, celebrities have dedicated their careers to learning how stories work and why certain ones succeed while others fail. That is not insignificant. Perhaps it’s the best thing they have to offer.
