The news is out: Creative Fabrica raised $7M. About two years after we invested EUR 500k in Creative Fabrica’s first-ever round of funding, we’re happy to welcome creative VC Felix Capital and fellow marketplace investor FJ Labs to the (cap) table.
With the launch of Peak Capital IV, we have started the tradition to openly communicate “why we invested” in each company. As a sort of ‘post-investment thesis’, these articles are an exercise in reflection. For the outside world, they are an exercise in transparency. In an opaque industry like early-stage venture capital, we hope that these looks under the hood provide insight to (our) investor decision making.
Given our participation in the Series A marks our second investment in the company, this look under the hood will be slightly different. Armed with 2 years of strategy sessions, data, anecdotes, and impressive growth, we have more than conviction to reflect on in this article. Hence, we’re happy to present: Why we invested in Creative Fabrica – again.
The sentimentalist in us decided that in honor of the “7” million raise, we’ll choose and dissect the “7” main reasons we’re excited to continue investing in Creative Fabrica. Now, without further ado…
1. A marketplace investor dream: a product that provides real value for creators (supply)
It’s long been hailed that the cubical is dead… now, so is the rocketship. For the first time in decades, more children want to be YouTubers than astronauts when they grow up (Forbes). What is so captivating about making videos online that beats exploration of the *actual* cosmos?
Children choosing for creative career paths is no error or overnight development; it is reflective of a shift in societal consciousness. That shift is towards caring more about feeling fulfilled in our jobs, being our own boss, and about how we spend our time (Signal Fire). This shift has given rise to a new economy: the Passion Economy (at times, referred to as the creator economy).
With powerful tools in our pockets (smartphones! Laptops!) and new platforms like Twitch, YouTube, Substack, Etsy, or the spicy entrant OnlyFans, people are able to make a living with their own skills and on their own terms. This is the Passion Economy.
Note: While there are many similarities, the Passion Economy is importantly different from the preceding ‘gig’ economy. Uber, Deliveroo, and other gig-economy trailblazers also enable people to make a living on their own terms to an extent. Gig economy platforms focus on standardized/commoditized labor, paid in exchange for hours worked (Andrew Chen) aka rather than monetizing skills, workers earn for their time. The gig-economy promises that each Uber ride you take will feel the same.
The Passion Economy is different: it allows people to make a living on their own creative skills rather than time. It is about individuality and monetizing what someone truly loves. Here, creativity wins.
Creative Fabrica spurs the growth of this new economy in building an ecosystem for crafters and digital creatives. On the supply side, they provide tools and a global audience for designers. This enables designers to make a living doing what they love and selling their designs.
Why are we excited? Be it in our role as a SaaS or marketplace investor, we love companies that solve big problems with painkiller (≠ vitamin) solutions: companies that create real value for their users. If livelihood + happiness isn’t real value, we’re not sure what is…
2. A marketplace investor dream: a product that creates real value for users (demand)
In addition to the Passion Economy (i.e. those who want to make a living out of their passion), there are even more people who are looking to enrich their lives outside of work and away from their inspiration-lacking manual labor and desks. Not everyone will quit their job tomorrow to pursue a career live-streaming on Twitch…
They are just looking for a hobby… an outlet that provides us escape on a bad day, entertainment on a good day, and fulfillment on the best. I put the word ‘just’ in italics for a reason: do you know how many people that is? 63% of the US households are actively engaged in a form of crafting, and with the increase of wealth globally, that share is just growing. The crafting market is estimated to be around USD 200 billion – only a fraction of which is digital yet.
Creative Fabrica provides an ecosystem to pursue those outlets at all stages of the creative process. They started with a library of premium content to use in projects like unique fonts, graphics, and other digital assets. Beyond the library, Creative Fabrica is expanding with resources available for users to 1) learn new skills and techniques, 2) find inspiration, 3) collaborate with others, 4) build and generate designs, and 5) share creations. Users can find value on the platform across all of the stages of the creative process and more is yet to come. So excited when reviewing their immense roadmap…
Beyond the creative process, Creative Fabrica also creates real value in catering to a wide range of creative verticals and subject matters. By creative verticals, we mean types of crafts and projects. Users can find resources for an ever-growing selection of crafts like embroidering, quilting, and coloring books or for projects like product mock-ups, UX/UI kits, and logo design. At a subject matter level, Creative Fabrica is home to designs related to categories like “animals” to hyper-niche topics like “St.Patricks Day” or “porch signs”. They provide highly curated content across underserved verticals – and there is still so much more to build.
Why are we excited? As a marketplace investor, we applaud how Creative Fabrica provides real value to both their supply and demand. Creative Fabrica by catering to their specific needs and identities of their demand-side users. For these individuals starving for creative outlets, Creative Fabrica is a full course meal – or rather, a buffet.
3. An exciting growth engine
Creative Fabrica has evolved from a standard two-sided marketplace to a multi-sided ecosystem. At the core of this ecosystem are multi-sided sided network effects between supply and demand. You can understand this as a continuous loop of influence, inspiration, and creation between graphic designers, crafters, and other creatives using the platform (and even, third party platforms!).
The team is working to further augment and increase the size of these effects, be that through rewards, referrals, marketing tools for creators, and other tactics up their sleeve.
Why are we excited? This cycle of influence and creation will continue to evolve and Creative Fabrica’s platform will become more valuable to all sides as more users join. The company has already over 1 million users and the interaction between those users creates a continuous boost of engagement and new users.
(P.s Curious to hear how Creative Fabrica cracked the classic marketplace chicken-and-egg problem? Or the differences between marketplace network effects and virality? As a marketplace investor, we write on these topics and more. …Shameless plug over 😉)
4. An impressive roadmap and stamina
Creative Fabrica ships – and they ship fast. The time from conceptualizing new products and features to shipping them is impressive. Beyond the value that they already bring to their community of crafters, lies a colorful roadmap of products and features for both the supply and demand side.
We also love the way the cooperation with the team is in this respect:
First of all, we have to acknowledge that, as investors, we should really stay away from infringing on their roadmap. We know quite a bit about data, hiring, fundraising, and the like, but we’re very happy that we made the agreement with Roemie and Anca that whenever we start to intervene in their product roadmap, the first thing they should do is ignore us. Creative Fabrica, whose own team is made up of creatives and creators as well, knows their company and community best.
The second part of our cooperation is that they make extensive plans on what they want to build next and why, and let us challenge that. It may sound contradicting with the first part of our pleasant cooperation, but it doesn’t: we are ‘allowed’ to share all our thoughts on the impact on conversion and retention, how to measure and analyze the data (yes, we love data…), and resources required to complete the task at hand. They listen and listen, are quiet for a while, and then come back – usually the same night at around 11 pm – with an improved version of their own path. They never incorporate anything they don’t genuinely believe in themselves.
Why are we excited? This continuous high-pace shipment demonstrates the team’s unmatched execution power and real fire for what they’re building – and the community they’re building it for.
5. Global reach
The concept of home is a hard one for Creative Fabrica. As their website states, CF is made with love in Amsterdam, but the Netherlands is not really their home market. The majority of Creative Fabrica’s business comes from overseas. Their community of over 1 million creators is international and they had sales in over 175 countries in December alone.
That being said, they are concentrated in one key market: the USA. Currently, more than 60% of their business comes from the US, and another 20% from 3 other English-speaking markets: the UK, Canada, and Australia. The Netherlands is their home market in theory, but the United States is their home market in practice.
Why are we excited? The Creative Fabrica team is silently taking over the US crafting market all while being based in Amsterdam. With their recent translations and crafts offerings for the German and Spanish markets, they are ready to systematically capture other markets as well.
6. A growing team with the right mindset
When the founders walked into our open office hours, they were with a small, scrappy team of 6. During 2019 and 2020, they have long outgrown their old coworking spot, having grown to a team of 30 people – with over 15 different nationalities. Their diverse team shows that crafting has universal appeal. Together, the team has the international mindset needed to continue Creative Fabrica’s global expansion.
Why are we excited? Creative Fabrica is planning to triple their team to 90 in the coming year. With an open, respectful culture, and the aforementioned global mindset, we are confident that they can bring the right talent on board for the ride.
Are you one of them? Check out their open positions (25 (!) at the time of writing this post) across development, product, marketing, community & content, HR, and operations. More information can be found on: https://www.creativefabrica.com/jobs/
7. Strong co-investors
The $7M Series A is led by Felix Capital with FJ labs stepping in as well. Felix Capital brings strong expertise on companies built by and for “the creative class”. Their portfolio focuses on the intersection of technology and creativity. And well… Creative Fabrica = Technology + Creativity.
Similar to our own focus as a marketplace investor, FJ Labs loves a good marketplace too. With a portfolio of 531 (primarily) marketplaces – spanning Alibaba to Lime, we’re very pleased to have such knowledgeable, specialist investors alongside for the ride upwards.
Why are we excited? In the end, raising a funding round isn’t just about the cash. It is also about what experience and knowledge the new shareholders bring- and whether the cooperation and dynamics are bringing true benefits to the company. We’re confident that both new investors will be true supporters for the business (let’s just hope they also can refrain from intervening with the company’s roadmap 😉).