Passes - Getting The Creator Economy Paid

Company & Team Introduction

Passes is the creator monetization platform going head to head with the 800-pound Gorilla in the space, Patreon. The company was founded by serial entrepreneur Lucy Guo in 2022. Her impressive journey, from co-founding now Decacorn Scale AI last valued at 13.8B, to co-founding notable VC firm Backend Capital, is a testament to her entrepreneurial spirit and Passes' potential. Guo started the company with a vision to provide creators with the tools they need to become entrepreneurs, and with her extensive network of investors and top startup talent due to her successful stints as both an operator and Venture Capitalist, she is well-positioned to make it happen. Passes is based in Miami, Florida and has scaled (pun intended 😉) their team to ~22 employees.

Product Overview

Passes is a leading creator monetization platform that enables creators to paywall exclusive content, purchase memberships, and receive donations from fans, helping creators generate a steady income stream. Passes gives creators all the tools they need to strengthen their relationship with their biggest fans with features like 1-on-1 DMs, paywalled live streams, and direct calls. The company has also built their own anti-screenshot and unique watermarking technology that allows exclusive content to stay hidden from people that aren’t subscribed and the watermarks allow for Passes DMCA to find and take down any content that may have been leaked, which has been a massive problem on other platforms. Creators can customize what is included in their subscription packages, add multiple subscription tiers, and offer lifetime and special limited edition memberships. Other features like their post scheduler and Drip DMs, which send automatic DMs based on specific actions users take on the platform, allow creators to automate parts of their business, making their lives easier and allowing them more time to focus on content. The company also offers same-day payouts for creators, an enticing feature for creators that may need quick capital to invest in an upcoming video idea. Passes also has aspirations to get further into creator commerce with the ability to spin up e-commerce stores coming soon.

Total Addressable Market

The total addressable market for Passes is immense. According to research from Goldman Sachs, in 2023, the creator economy was estimated to be larger than $250B annually. Goldman is also forecasting strong growth through 2028 with estimates that the creator economy will develop into a ~$480B opportunity and expects the 50M creators across the globe to compound at a 10-20% CAGR through the same period.

Business Model & The Numbers

Passes utilizes a simple transaction-based business model to monetize its platform. The company takes a flat 10% + 30c per transaction made through the platform. The company has already paid out tens of millions of dollars to their creators, and they have several creators on the platform who are on track to make north of 1M this year. Research from Sacra estimates that Passes was at a 9.5M in net revenue run rate in March 2024, up an incredible 164% YoY from just 3.6M in net revenue run rate in 2023.

Traction

Creators have flocked to the Passes platform over the past couple of years due to the unique features and blazing-fast product development speed their team has brought to creators in such a short timeframe. The company already has over 1,000 creators on their platform, including mega influencers like Huddy and Emma Norton, in addition to other top talent like athletes, musicians, TV stars, etc., like rapper and media personality Black Chyna, DJ Kygo, and NCAA champion gymnast Olivia Dunne, among creators on the platform. Passes has also forged early partnerships with massive brands such as Endeavor, Amass, Dorado, and Comfrt to bring unique opportunities to their creators.

Competitors

The creator economy has exploded over the decade, with creators’ content reaching millions of viewers daily, but even having a massive audience may not be enough to monetize their content sufficiently, as ad rates are based on a myriad of factors including: the language used in videos/posts, subject matter, video length etc. This is where the opportunity for Passes lies: filling that monetary imbalance through their fans’ support while strengthening their relationships with fans. Passes has 2 main competitors in OnlyFans and Patreon and has done an incredible job bringing the best of each platform into one.

OnlyFans - OnlyFans was founded in 2016 by father-son duo Guy and Tim Stokeley before selling to the current owner Leonid Radvinsky in 2018 for an undisclosed amount reportedly in the millions. There is one massive difference between Passes and OnlyFans, and it lies within their company policies. Passes does not allow Nudity or sexual content on its platform, which has enormous effects on the users the company attracts. OnlyFans business is closer to a D2C porn site; where Passes is building a place where fans can go to find exclusive appropriate content and monetize their fanbase; not post explicit content. OnlyFans also takes a 20% cut of all transactions made through its platform, much larger than Passes’ 10% + 30c fee, in part because the porn industry is considered a high-risk for payment processors. OnlyFans has never raised external funding, and net revenue was estimated to be ~2.5B in 2022.

Patreon— Patreon was founded in 2013 by Sam Yam and musician Jack Conte, who wanted to make a living from his YouTube videos. Over a decade later, the company has exploded to what has become the de facto platform for creators looking to monetize their audience. When comparing Passes to Patreon, the Passes platform outshines Patreon feature-wise. The Passes platform allows you to offer lifetime memberships and charge for DMs with fans. Creators can also broadcast live streams or have direct calls with their fans with customized pricing (1-time fees and pay-per-minute or free). Another extremely valuable feature that Patreon lacks is the anti-screenshot technology Passes offers. Instant payouts, the ability to schedule posts, and sequence automation also differentiate Passes from the competition. In addition to the robust feature set that Passes offers, their pricing is competitive with Patreon’s; Patreon takes an 8-12% flat fee depending on the plan they choose, but also has payout processing/hidden fees. Revenue figures for the company haven’t been disclosed recently, but in 2022 it was estimated Patreon generated 75M-180M in net revenue and has raised a total of 412M from an elite group of investors including the likes of Index Ventures, Thrive Capital, SV Angels, and Sam Altman.

Funding

Passes has raised 2 rounds of funding so far. The company raised their seed round in mid-2022, raising 9M from an impressive list of institutional backers, including Multicoin Capital leading the funding effort and participation from other well-known firms such as Menlo Ventures, Roadrunner Ventures, Craft Ventures, Liquid 2 Ventures, Florida Fund, Anti Ventures, Abstract Ventures and high profile angels Christian Elder and Darian Shirazi (Co-Founder, Radius Intelligence). Passes just announced a massive new 40M Series A round in February of this year, with Bond Capital spearheading the funding event in addition to more top-tier investors, including Crossbeam Ventures, and notable angel investments from high-profile angels such as the co-founders of Skims Jens and Emma Grede (Co-Founders, SKIMS), Alexandra Botez (Professional chess player + Co-Founder, Millions of Monsters) and Abstract Ventures doubling down on their initial investment.