Fanbase, a monetized social media network that allows users to make money through subscriptions and virtual currency, opened its second funding round on StartEngine last week. Previous to this round, Fanbase raised $3.5 million dollars in its 2021 seed round. The company’s goal now is to raise another $2.6 million—and after 10 days of its second round being open, it’s already raised more than $817,000 of that goal.
On the heels of this fundraising news, the Daily Dot spoke with Fanbase’s founder Isaac Hayes III. He’s an Atlanta-based music producer and songwriter turned technology entrepreneur. Hayes’ songwriting-producing credits include T-Pain’s “Buy You A Drank” and soundtrack music for Pitch Perfect 2. (Yes, his father is soul icon Isaac Hayes.) More recently as a producer, Hayes has utilized social media to market his stuff.
Hayes told the Daily Dot that one day in 2018 he came up with a big idea.
“I decided to get into this tech space when I saw there was a need for people to monetize their content. I felt like that’s the future of what content distribution and consumption was going to be,” he said.
Hayes started out by asking people he knew for advice and feedback on his idea. He told the Daily Dot that he was lucky enough to have already been in touch with mentors in the buzzing tech community in Atlanta.
Hayes said he spoke a lot with the tech folks he knew, and he eventually felt confident enough to invest $200,000 of the money he collected from music royalties into creating the app: “Everyone doesn’t have that opportunity, but it was still a risk. It’s not money that I had to spare, but I believed in what I was doing.”
Finding the right people to work with, who also believed in the premise behind Fanbase, was a challenge for Hayes. He recalled being told by many people that they were “too busy” to work with him or his idea. But this rejection, he said, didn’t discourage him. “I come from the music business so rejection is all day everyday. It takes time to find the right person to work with.”
Hayes eventually found the “right” people with interest in his idea. Hayes said he was able to meet with a company called ConsultR that had seen success building apps for big corporations like Taco Bell and Heineken. Hayes told the Daily Dot that he was honored when he discovered that Fanbase was the first app that ConsultR wanted to invest in and have equity in.
A lead at ConsultR was Ramiro Canovas, a former professional soccer player turned tech wiz. He would eventually become the chief technology officer at Fanbase, working on things like app development and integrations. “I’m the big idea guy,” Hayes said, “Ramiro makes the buttons do what they’re supposed to do with perfection.”
After assembling a team, Hayes faced another hurdle: raising capital. “Initially, most startups—especially Black-founded startups—don’t really get access to capital.”
Hayes ended up turning to StartEngine, an equity crowdfunding platform that allows users to invest in startups. Hayes said that StartEngine put him through a rigorous process of establishing and pitching his project, which ultimately made him a better founder.
Eventually, Hayes saw success in his crowdfunding campaign. He became the second Black man ever on StartEngine and the third Black man to raise $1 million in a Regulation Crowdfunding campaign.
Now Hayes is looking to scale his business. He sees a user base hungry for better platforms, and irritated: “A lot of users that are frustrated that they are not making money, but they seeing other people benefit from their contributions to social media.”
Hayes continued, “Everyone on social media is a content creator. Whether you post one photo a year, or one hundred photos a day, you’re contributing to the volume of content that allows platforms to run advertising and make billions of dollars a year.”
Hayes claimed that ad-based social media models, like the models behind Instagram or Facebook, are making it difficult for creators to see full visibility for their content and monetize their reach. Creators, he said, are often in competition with the platforms that they use.
“What I mean by that is, most creators and users on Instagram are having their content throttled down or suppressed significantly. The reason is: Why would a platform provide the same visibility to you for free that it is charging companies for? You’ll never get full visibility, because if you did get full visibility, guess what? The brands would come and pay you and not Instagram,” Hayes said.
So how does Fanbase’s model differ from ad-based models? Instead of making money from ads, Fanbase takes a 20% cut of in-app purchases and gives the rest to creators.
“Rather than focusing on advertising dollars, I think there is a bigger market for subscription based revenue for users. We don’t run ads, we don’t suppress content. If you have 1 million followers, we’re going to send out 1 million notifications…”
“That gives you an opportunity to make money, because everything on the platform is positioned for users to either subscribe to you or give you virtual currency,” Hayes continued, “Subscription-based content is the way of the future.”
Hayes expressed his interest in becoming a go-to subscription model social media app for a younger audience: “Most social media platforms in my opinion are older, except for TikTok, which is why you see a lot of platforms pivoting. Myspace is dead, Facebook is a senior citizen, Instagram is an adult, Snapchat is a millennial, and TikTok is a centennial.
“Fanbase doesn’t necessarily want to compete with any of those platforms. We want to fall in succession as opposed to competition.”
Finally, Hayes shared his advice for creators who want to use Fanbase. “I would suggest users never leave the platforms they have followings on…You should leverage the audience you have on other platforms the best that you can to drive them to spaces and places that you can monetize.”
Does your business cater to creators? Shoot an email to [email protected] for a chance to be featured in an upcoming newsletter.