Caravan, a celebrity-brand incubator aligned with talent agency CAA, has raised $50 million with e-commerce investor Clearco to support startup business with celebrity backers, with the first check going to fit52, a fitness and wellness app created by country music star Carrie Underwood in 2020.
Caravan, begun as a joint venture with talent agency CAA in 2018, helps stars build companies around their brands with ventures that include Underwood’s fit52 and cat-food company Love, which is run by the owners of Nala the cat, the influencer with more than 60 million followers on Instagram, Twitter, YouTube and Facebook. The startup has raised $12 million from investors including Hasbro, Real Ventures and SeedCamp. The company is raising another round of about $25 million, which it plans to use to make further investments in celebrity-backed companies. (Forbes Media is an investor and business partner with Caravan.)
Clearco, formerly Clearbanc, has provided more than $2 billion in capital to more than 5,000 e-commerce companies and mobile apps since 2015, including Public Goods, Untuckit and Andie Swim. The alliance with Caravan gives the firm direct access to celebrity brands, which have seen heightened interest among celebrities and investors in recent years, which Caravan cofounder and CEO Leonard Brody said was intensified during the pandemic.
“You had people reevaluating their lives in Covid and the things that they wanted to do and were passionate about,” says Brody, a former venture capitalist. “And there was the recognition by the folks that are around celebrities that this is really an area they should be in.”
Caravan, which has ownership stakes in a number of celebrity-backed companies, will change its approach with the new funding and follow Clearco’s strategy of taking a cut of revenue rather than equity, allowing startups to accelerate their growth without dilution. The investments, they say, will be aimed at improving day-to-day operations, marketing and inventory management.
“Traditional equity or venture capital requires an exit,” says Clearco cofounder and CEO Andrew D’Souza. “Many of these brands, they don’t necessarily want to do that. They may want to own it forever.”
Or not. Earlier this year Conor McGregor collected about $150 million before taxes when he sold his majority stake in whiskey brand Proper No. Twelve to Proximo Spirits, a deal that landed the UFC fighter at the top of the 2021 Forbes list of Highest-Paid Athletes. In March, Jay-Z padded his billionaire fortune by selling two investments—half of his Armand de Brignac champagne and a majority stake in music streaming company Tidal—collecting more than $600 million. Kylie Jenner pocketed $600 million before taxes when she sold 51% of her Kylie Cosmetics line to Coty in 2019, and less than a year later the publicly traded cosmetics company paid her half-sister, Kim Kardashian West, $200 million for 20% of her KKW Beauty. George Clooney-backed tequila brand Casamigos sold to Diageo for up to $1 billion in 2017.
That’s not to say the ventures come without risk. For every Casamigos there are flops like Donald Trump’s steaks, a restaurant chain started by Steven Spielberg or the Kardashian-backed credit card. There’s also the added risk of fickle fans: Celebrities often fall out of favor, whether they are just no longer relevant or criticized for past behavior. Take Chrissy Tiegen: Until recently her line of cookware, Cravings, was sold successfully at big box stores nationwide, and she was tapped by Jenner-Kardashian matriarch Kris Jenner as the cofounder of a new cleaning line, Safely. Then, over the last couple of months, amidst revelations of online bullying, Macy’s seemingly stopped selling her cookware on its website, and the onetime supermodel stepped away from Safely last week.
Brody and D’Souza see the opportunity in celebrity companies as outweighing the risks, especially with the platforms most celebrities actively leverage through social media, TV appearances and media coverage. While mum on any specific plans beyond fit52, the partners expect to announce more investments in the coming months, with Caravan planning to co-launch between six and eight new celebrity-founded businesses each year.
“If you can bring in an aligned, familiar personality and their audience, and you can pair it with world-class performance marketing and intelligence . . . magic really starts to happen,” D’Souza says.
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