The Sweat Sound of Success — Why Celebrities Are Looking for Equity Deals

Nat Rubio-Licht
Nat Rubio-Licht is a freelance reporter with dot.LA. They previously worked at Protocol writing the Source Code newsletter and at the L.A. Business Journal covering tech and aerospace. They can be reached at nat@dot.la.
Beyonce and LeBron James surrounded by cars and money
Image by Andria Moore/Getty

In 2014, LeBron James made roughly $30 million doing absolutely nothing.

He’d begun an endorsement partnership with Beats Electronics back in 2008, taking an equity stake in the company over cash payment for doing nothing more than just wearing the headphones in public. Six years later, when Apple acquired Beats for $3 billion, James got to cash out — big time. Beyonce did the same with Uber. And the artist David Choe, with Facebook.


While deals like these were novel several years ago, more and more often celebrities are wanting more than just cash. Instead they want deals like those mentioned above otherwise known as sweat equity.

“This is very fucking new,” Jackie Fast, managing partner at early-stage fund Sandbox Studios VC, said of the increased frequency of sweat equity partnerships, in which celebrities are taking equity in the companies they promote instead of cash. “The idea was if you did an equity deal, your agent wasn't good enough to get you a cash deal. But this really just changed, I would even say in just the last two years it’s been really, really different.”

To Fast’s point, celebrities, it appears, are getting wise to the value they bring to the table when making themselves the face of a brand. While endorsements have been around forever, the talent has typically been paid a cash fee upfront — Steph Curry’s $215 million multi-year deal with Under Armour — for showcasing a brand to their followers or starring in a commercial.

But increasingly, celebrities prefer equity. For example, in 2020, oral healthcare startup Byte partnered with actress Kerry Washington to promote their telehealth platform. Thought details of the deal are scant, one can imagine it paid off when Byte was acquired by Dentsply Sirona in December 2020 for $1 billion. Singer Ellie Goulding, lead endorser in CORE Hydration, likely walked away with a solid paycheck too after the water bottle company was acquired by Keurig Dr. Pepper in late 2018 for $525 million. And Vide Beverages has had two venture funding rounds since actress Olivia Culpo was announced creative director in late 2020.

So what’s the issue? Simply put, agencies don’t have enough staff to manage the sheer number of pitch decks, startups are sending to their clients to look over.

Currently, talent agencies' business models rely on the windfall of cash they get from clients when they book major gigs or get big brand deals. So while celebrities and agents getting a sliver of the equity pie might be to an agent’s benefit down the line, the increasing cadence of sweat equity deals may make it harder to keep the lights on.

“The issue with the agencies is that they are not set up to do equity deals,” said Fast. “They can't pay rent with equity.”

That said, agencies will have to figure out a way to manage. Not least because small startups trying to gain brand recognition prefer them. The reach, engagement and trust that celebrities bring to partnerships can go a long way, Fast said. And with the sheer amount of pitch decks agents are fielding for their clients, the pressure is on from both startups and celebrities to make these deals work.

Investing and due diligence, however, take massive time and energy. And even then not every startup is going to be Facebook or Uber. Which is why these opportunities for artists or athletes to own a piece of the upside they're generating for the companies they partnered with have traditionally been relatively limited, said Amanda Groves, general partner at PLUS Capital—a venture advisory firm and broker dealer which helps high-profile artists and athletes structure deals.

“Investing requires an incredible amount of know-how, experience, sophistication and a network within venture capital and in particular in order to be able to adequately due diligence, equity risk versus cash value today,” Groves added.

Plus, the majority of startups fail, so taking an equity stake may lead to zilch a few years down the line.

For the agencies that represent them, the staff and resources needed to deep dive into researching a company is not an expense they can afford — especially when equity deals aren’t in an agency’s best interest, anyways.

“It’s a waste of time for them,” Fast said. “You're doing all these deals, you're spending loads of time on these projects that may amount to nothing.”

Nonetheless, these deals are only getting more frequent. When Fast’s Sandbox Studios, which focuses solely on startups that have celebrities attached, was founded in 2021, she didn’t expect to see more than 70 deals. But since then, Fast has seen more than 250 deals of this kind. And next year, she expects that deal count to grow to between 350 and 400.

As these deals become more commonplace, agents simply don’t have the bandwidth to handle them, Fast said. A-list clients can receive thousands of endorsement requests and inquiries per year, she continued, and even lesser known figures can be hit up by a few hundred brands a year. If an agency has hundreds of clients, just sifting through those requests would take hundreds of staff and thousands of hours. Even though major agencies like CAA and WME have venture capital arms, those staff often don’t have the time to look at hundreds of pitch decks when they also have their own work to do, Fast said.

“There just aren't enough people to be able to do that,” Fast said. “And there aren't any people because there's no money in equity deals.”

One solution is for the celebrities to get good personal business managers, Groves added. Having a good business manager could alleviate the stress of deal vetting from the agency. But any equity deal a celebrity takes still takes away time they could be using to do gigs which make them cash.

“The truth of the matter is, most agents will want the celebrity talent that they represent to do what the talent does,” Fast said. “It's not in an agency’s best interest for a celebrity to spend 40 hours a week at an investment firm rather than going on auditions and trying to book movies. The ideal is you have somebody who's constantly and wants to book movies and shows.”

nat@dot.la

🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

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