India’s Struggling Creator Economy Startups

Startups designed to support digital creators and influencers are seemingly ubiquitous in today’s social media-dominated landscape. However, for a number of startups within India’s creator economy, this bustling marketplace is proving to be challenging. Over the last year, an alarming number of these businesses have shut down, despite previously amassing substantial capital. Why is it that these seemingly promising ventures are struggling to stay afloat?

A Troublesome Year for Creator Economy Startups

It’s undeniable that the past 12-18 months have been challenging for startups within the Indian creator economy. Despite the flourishing landscape of influencers and digital creators, businesses designed to help them monetise their content are struggling to find a product-market fit.

The struggle has led to the closure of several startups, despite previously amassing substantial capital, in excess of £8.7 million ($12 million). Others have been forced to pivot, completely restructuring their business models in a desperate bid for survival. For some, even this hasn’t been enough, resulting in distressed sales as a last resort.

A Closer Look at the Struggling Startups

One of the casualties in this struggling sector is PenCircle, a fan patronage startup. Its operations have ceased completely, as has StreamAnchor, a community monetisation tool. The distress doesn’t stop there – Qorner, a financial platform for digital entrepreneurs, appears to have vanished, with their website no longer existing.

The startup Pixel Cards was forced to shut down due to regulatory changes by the Reserve Bank of India, a clear demonstration of the complex and ever-changing landscape startups must navigate.


The Problem of Product-Market Fit

Why are these startups failing despite the thriving creator economy in India? Experts believe the primary issue is that these startups are focusing too much on administrative issues and not enough on the unique challenges faced by content creators.
Instagram, for example, has rolled out creator-centric features like retail integration and subscription options, rendering some community monetisation startups redundant. As a result, creators are increasingly turning to established platforms, resulting in a reduced need for startups offering similar but less comprehensive services.

The Silver Lining

Despite the challenging landscape, some creator economy startups are holding onto hope. Startups like 9Unicorn-backed Cosmofeed, Accel-backed Rigi, and Y-combinator-backed Qoohoo, continue to operate despite the industry’s trials.

Yet even these hopeful businesses face challenges, notably the hesitance of creators to pay fees or commissions to these platforms. After all, many creators already allocate a portion of their income to talent management companies, leaving little room for additional fees.

The Future of Creator Economy Startups

The road ahead for creator economy startups in India is undoubtedly challenging. With the majority of creators’ revenue coming from brand partnerships rather than subscriptions, the traditional model of content monetisation may need to be rethought.

The next generation of entrepreneurs within this sector should bear this in mind, particularly as they usher in a new era of AI-reliant startups. While the creator economy continues to grow, so too must the businesses that serve it, evolving to meet the ever-changing needs of digital content creators.