The worlds of celebrity and venture capital have made fast friends. Celebrity-backed ventures receive the added benefit of piquing the public’s interest with the familiarity of a famous name. Plus, if seemingly passionate about any political issues, famous investors can easily put their money where their mouth is (and generate some press accordingly).
Venture capital (VC) is a form of private equity, investing in emerging businesses with high growth potential. These often include start-ups with substantial risk, but equally high returns. It is, by definition, an investment in another. But with these profit margins to be had, the pretenders can be difficult to distinguish from the genuine impact investors. For the celebrity artist, we might look to a relationship between their artistic output and their portfolio as confirmation of good intentions.
Hollywood star Leonardo DiCaprio has been consistently outspoken about climate action and the environmental world. Looking at his filmography, especially in recent years, this is no surprise. In 2016, he produced the environmental documentary Before the Flood and followed up with 2019’s And We Go Green, documenting Formula E (think Formula 1, but with electric race cars). The press takes notice; The Guardian even anointed him ‘a climate champion’.
The champ’s portfolio does stick to this script. In 2019, DiCaprio contributed funding to Aspiration, a California-based green fintech company, and serves on its board of advisors. Aspiration benefits from investors like DiCaprio, and operates what would be a risky fee system for traditional banks: ‘Pay What is Fair’. Celebrity support, which in turn drums up media attention, no doubt helps green firms whose initiatives cost more to run. (Even Aspiration has had its share of funding issues).
DiCaprio isn’t the only celebrity with impact on his mind. Rap mogul Jay-Z has his own suite of VC initiatives, many of which focus on community engagement with his home neighbourhood of Marcy, Brooklyn. In 2019, he co-founded the namesake Marcy Venture Partners (MVP), a fund which prides itself on a clear, if broad, commitment to ‘sustainability, inclusivity, accessibility, empowerment and health & wellness’.
Like DiCaprio, the rapper’s artistic output reflects his financial interests. It’s unsurprising that community investment is a focus for Jay, whose songs include ‘Brooklyn’s Finest’ (1996), ‘Where I’m From’ (1997) and more recently ‘Marcy Me’ (2017). Rather than just a multiplier of his wealth, Jay’s investments seem a confirmation of a long-held virtue to remember and support where he came from.
More entrants into celebrity VC seem likely. In recent weeks, quintessential celebrity Kim Kardashian announced a new private equity firm, SKKY Partners. Kardashian’s co-founder Jay Sammons, a former partner at The Carlyle Group, will no doubt bring established connections; Carlyle clients include Beats, Supreme, and McDonald’s China. With these heavyweight contacts and Kardashian’s action in prison reform, it will be interesting to see what role, if any, impact investment plays at the new fund–all made the more doubtful by Kardashian’s misleading promotion of cryptocurrency, for which the SEC fined her US$1.26m.
Kardashian is just one of many celebrities who began to mingle with the unregulated and often speculative world of crypto. In April 2022, Jay-Z’s MVP joined Drake, Justin Bieber and a list of others in funding for start-up MoonPay Ltd., a platform which allows the purchase of cryptocurrencies via credit or debit card. This was a hint of Jay’s crypto interest, which manifested in June with The Bitcoin Academy, an educational initiative focused on cryptocurrency exclusively for residents of Marcy housing projects. Like Kardashian, Jay invited his share of critics, many of whom noted the irony of encouraging speculative investment among low-income earners.
Even ostensibly impact-minded investors can move in murky waters. And, like exchange-traded and mutual funds, some celebrity capitalists are more impact-driven than others. Examining their interests elsewhere, however, will show you who’s investing in others and who’s investing in themselves.