Short-Form Studio FazeWorld Raises $750k

December 14, 2023 by  Chris Erwin

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss FazeWorld’s seed raise from UTA chief and other angels, and why their unit economics are compelling.

 


Short-Form Studio FazeWorld Raises $750k

 

In today’s market, new creator economy fundraises are rare.

Particularly when they’re for content studios.

But a new short-form studio called FazeWorld, and its recent seed round, is getting a lot of press. And for good reason.

Let’s break it down…

 

DEAL DETAILS

  • $750k seed round

  • $7.5M valuation

  • Investors incl prominent media x tech angels

 

COMPANY OVERVIEW

  • Short-form studio

  • Focus on TikTok, Instagram, YouTube

  • High prod quality, low budgets

  • Unscripted focus

  • 4 team members

  • Profitable

 

ORIGIN STORY

  • Started 2023

  • Founded by Adam Faze (former Mad Realities) & Saheer Mathrani

  • Simple pitch → decline of TV, rise of digital for news / entertainment

 

HOW MAKES $$

  • Branded content studio (primary revenue driver)

  • Show sponsorships

  • Merchandising

  • Licensing

 

CONTENT HIGHLIGHTS

  • 1st series Clockwork Dynasty drove 100k followers, 12M views in 8-episodes. Now in 2nd season

  • Einstein Elementary had $18,268 budget, drove 150M views. 12 eps, mostly a guy ranting in front of NY Stock Exchange

  • Upcoming slate incl game show, talk show, and political network

  • Shows built around talent with audience and niche focus (e.g. Birds Aren’t Real founder, nail artist)

 

My takeaways…

Glad to see media execs and personalities in cap table, like UTA founder Jeremy Zimmer and show talent like Kareem Rahma. They can bring talent, audience, brands, strategic partnerships.

Also some tech money including execs from Adobe, Sinai Capital Partners, others. Tech $$ just loves media, even though strategic value is minimal, and ROI expectations never aligned!

$7.5M valuation makes me curious what revenue is.

Being founded in early 2023 with focus on branded content to start, I’d assume $1-2M for 2023 at high-end. A perceived high valuation for this market.

But valuations in an initial seed round typically aren’t the focus; instead, they’re the result of ensuring founders maintain sufficient equity on the cap table (in this case 90%), leaving room for future dilution in subsequent funding rounds.

It’s key to have founders maintain ample equity to be properly incented to keep building. Startups are a grind, and equity is the motivator!

And for investors on cap table, they’re the types going for a much bigger win than $7.5M. And if Faze doesn’t get there, then likely a fun ride along the way, and no sweat off their back.

Obviously this makes me think of Quibi. But strategy and unit economics for Faze make so much more sense:

– Programming where audiences are on existing short-form platforms VS forcing new user behavior on new app / CTV

– Much better $ / minute content economics –  $100+ VS 100,000+ (mind blown)

– Casting digital-native talent who can better attract youth audiences VS expensive A-list celebs who gen Z doesn’t even know about

 

Who are peers here?

Names that come to mind include Fallen Media, Amp Studios, Mad Realities, Vertical Networks (acquired by Team Whistle), and the Moonshots initiative by our friends at Portal A.

There’s likely many more, DM me with others. And I’m curious how they’re all performing.

Net / net, I like seeing this. Smart strategy, early traction, lean economics, good investors, good creative sensibility, good founder fit, and seems like a real chance to make great IP at low cost.

Rooting for them.

Good to track these new media models, so we can get to more sustainable media economics for all!

I’m the founder of RockWater Industries. We do financial and strategy advisory for media, tech, 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

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