Brat Buys Crypt TV + More Digital Rollups
RockWater Roundup
RockWater analysis to make you a better investor and operator. Today we discuss Brat’s purchase of Crypt TV, and why this might signal more M&A for Brat going forward.
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Brat Buys Crypt TV + More Digital Rollups
Is Crypt TV the first of Brat’s digital rollups?
I think so, and future targets include social pubs and influencer marketing agencies.
Let’s break it down…
🎯TARGET: CRYPT TV
- Gen Z studio – “Marvel for Monsters” for social generation
- Founded 2015 by Jack Davis and Eli Roth
- $6.2M raised from NBCU, Blumhouse, Lerer Hippeau, Advancit
- Early YouTube and Facebook focus, videos < 3 min
- 10M+ social fans
- Tentpole series incl The Look-See, The Birch
- Recent focus on premium video – series on Peacock, feature film at SXSW, 2 Meta VR films
- <7 employees in LA (per LinkedIn)
💵BUYER: BRAT TV
- Gen Z content studio, youth culture focus
- Founded 2016 by Rob Fishman and Darren Lachtman
- $45M raised from Anchorage Capital, Lerer Hippeau, Advancit, BoxGroup, Thirty Five Ventures,
- 5M+ YouTube subs
- Tentpole series incl Chicken Girls, Attaway General
- Has podcast network (Past Your Bedtime), IM (Beeline Talent), and FAST network
- Bought ecommerce platform Jemi in 2023
- <30 employees in LA, NY (per LinkedIn)
🤝DEAL DETAILS
- Crypt Investors will join Brat TV’s investor base, incl New Line Founder
- Seems Crypt investors rolling equity into new combined co, get smaller piece of larger pie
- Likely no cash in deal – saving it for working capital / growth
- Earnout unlikely since integrating assets, and Crypt leadership focused on new projects
🤝POST-DEAL OPS
- Relaunch Crypt social channels w/ new creator-driven series, re-engage fans
- Crypt leadership team (incl Darren Brandl) continue developing projects for film / TV, incl IP from Brat
💡DEAL RATIONALE / SYNERGY
- Broaden digital footprint to new audiences in different genres
- More social inventory for Brat sales teams
- More talent access for Brat’s IM division
- Plug in Brat’s alt monetization tools like Jemi to drive new Crypt revenues
🤔 What else I find interesting about the deal…
Lots of overlap between Brat and Crypt cap tables, meaning a shared investor base.
So investors likely saw clear combo synergies and may have pushed for the deal. Wanting a single more powerful horse for digital media play in a consolidating industry VS 2 separate bets. Further, seems both founders and CEOs have different passions and capabilities (scaling team and monetization VS premium IP dev), so combining allowed each to focus on what they like and know best.
To be clear, both companies have built franchises out of original shows and characters. But Jack / Eli / Darren) seem to want to go bigger on premium push to TV / film.
Another point to consider…with CryptTV recently focused on premium long-form VS social channels, the company could have been facing a cash crunch.
Premium content has long development and sales cycles and not a lot of cash comes in upfront. For a digital pub, this could be offset by programmatic social revenues like YouTube adsense and brand integrations, which could provide a recurring monthly stream of income. But with Crypt’s reduced focus on social content production and online audience building, this income stream was likely minimal VS prior years. And ongoing operating costs still need to be paid.
So instead of investors putting more cash into Crypt and their overall digital bet between both companies, a combination via equity deal was likely a preferred route. This is my guess of course, I’m not privy to deal details.
Of note, I think Brat could be entering into aggressive rollup mode, to both expand audience reach (Crypt deal) and ways to monetize (Jemi deal). And in a world where cash is expensive and buyers have leverage over sellers, Brat seems focused on using equity. Case in point, the Jemi acquisition in 2023 was all stock, and I believe Crypt was the same.
Which makes me think about what the next targets are.
With all the consolidation around influencer reps and agencies, and many subscale agencies wanting to find strategic partners, I expect Brat to focus here. Further, with Chicken Girls having expanded into podcasts, books, and other multimedia, I wonder if these types of co’s also become acquisition targets
I expect more Brat M&A in 2024.
Something else worth highlighting…
Rob has an impressive background. He co-founded early IM agency Niche, which sold to Twitter for $30M, and before that a Facebook data company Kingfish Labs which sold to Buzzfeed.
He’s got a track record of figuring out social before others and monetizing it. But those last deals were when interest rates were near 0 and our industry was in massive growth mode. Today, the market is different, with more headwinds, and a winning strategy today requires a different playbook.
But so far I like the moves I’m seeing from Brat, and if a rollup strategy is executed well in 2024, Rob could be setting himself up for another big win. But with $45M already raised, the threshold is high for positive investor ROI.
Speaking of co-founders…
Brat co-founder Darren Lachtman also started Goldenset Collective, a creator investment fund. The other co-founder is Nick Millman, who was an early exec at Brat and Niche with both Darren and Rob. Goldenset launched in 2023 with a $10M seed to deploy equity investments in creators, with many of the same investor backers of Brat and Crypt. It was reported by TechCrunch that the firm deployed $1M seven creators, including Audrey Hope, Christopher Sturniolo, Paige Taylor and Jeff Ma.
Brat cofounder Rob Fishman is an advisor → It’s clear this is a tight exec team, with a lot of shared history and success, with ambitions to make a lot of big creator economy bets.
And on the Crypt side…Jack Davis is very astute (he always impressed me in meetings), and then of course Eli Roth is one of the most well known and profitable film producers in the horror genre.
This will definitely be a team worth watching.
I’m the founder of RockWater Industries. We do financial and strategy advisory for media, tech, and commerce. From M&A and fundraising to consumer research and go-to-market planning.
DM me on LinkedIn or email me chris @ wearerockwater dot com
