The Rise of Community-Driven Companies: Why They are Great for Founders and Investors
In recent years, we have seen a surge in the popularity of community-driven companies such as Bytedance, Canva, Discord, Notion, OpenSea, Airtable, Reddit, Rappi, Patreon, Bitso, and Airbnb. These companies prioritize their communities and focus on creating value for their customers, which has allowed them to generate outsized returns for investors and build successful businesses.
Low customer acquisition costs are a major factor in why community-driven companies are great for founders and investors. By putting the needs and desires of their communities first, these companies can grow organically and get new customers through word-of-mouth and other forms of referral marketing. This cuts down on the cost of traditional advertising and also attracts more devoted and engaged customers who are more likely to stick around and keep buying the company’s products or services.
Another advantage of community-driven companies is their ability to increase the lifetime value of their customers. These companies are able to keep users for longer periods of time and increase revenue from each customer by encouraging a sense of engagement and belonging within their communities. This is especially helpful for companies with subscription-based or freemium business models because it lets them generate a steady stream of recurring revenue.
In addition to their low customer acquisition cost and high lifetime value, community-driven companies also benefit from the feedback and input of their communities. This can help with product development and decision-making. It can also help find top talent that is passionate about the company’s mission and values. By using the collective knowledge and expertise of their communities, these companies are able to innovate and adapt more quickly, which can give them a competitive edge in the market.
The rise of community-driven companies can be seen in their valuations and investment activity. In recent years, these companies have attracted significant interest from venture capital funds and other investors, who see the potential for outsized returns. For example, Bytedance, the parent company of TikTok, was valued at $300 billion, and Discord, a popular gaming and communication platform, raised $500 million at a valuation of $15 billion in 2021.
There have also been a number of well-known exits for community-driven companies, like Facebook, Coinbase, Uber, Airbnb, and Roblox. When they went public, these companies were worth between $30 billion and $104 billion. These exits not only made investors a lot of money, but they also proved that the business model of community-driven companies works and made it possible for this category to grow in the future.
Looking ahead, the future of work and the rise of the creator economy are likely to continue driving demand for community-driven companies. As more people turn to the internet to make a living and connect with others, platforms like Patreon and Bitso that support creators and independent workers will become increasingly important. Similarly, the shift towards an owner economy, where more people are looking to own and control their own assets and resources, will drive demand for companies like OpenSea and Airtable that help users manage and monetize their assets.
In conclusion, the rise of community-driven companies is great news for founders who start them and investors who invest in them alike. These companies offer a unique value proposition that resonates with the market and investors and are poised for continued success in the US and Latin American markets. By focusing on creating value for their communities and leveraging the collective knowledge of their users, community-driven companies are well-positioned to drive innovation and growth in the digital economy.
About Ganas Ventures: Ganas Ventures invests in pre-seed and seed community-driven startups in the US and Latin America. To learn more visit us at ganas.vc.
Disclaimer: The views above should not be taken as financial or legal advice. Please do your own research before making any financial and legal decisions.
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- Community-Driven Companies: What They Are and Why We’re Investing in Them
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About Lolita Taub: As a Latina emerging manager and general partner at Ganas Ventures, I always want to work with or invest in community-driven founders, funders, and friends. I have a strong track record with 15 years of experience in the Silicon Valley ecosystem. I have sold over $70 million in tech products and services, made over 90 investments as an angel investor and venture capitalist with Backstage Capital, Lightspeed, and The Community Fund, and had 3 successful exits from my portfolio.
Forbes, Inc Magazine, Nasdaq, and others acknowledge my efforts in advocating investment in underestimated and undervalued founders. I completed my undergraduate studies at the University of Southern California and earned my MBA from the IE Business School.
In addition to my professional accomplishments, I am a dedicated community builder with more than 78,000 founders, funders, and ecosystem friends. And I want to back founders who care about the community, invite LPs into the Ganas Ventures family, and build wealth in the community that will last for generations.
