The Celebrity Investment Wave: Why Private Equity Funds are the Latest Craze
From Jay-Z and Kim Kardashian to Carmelo Anthony, celebrities are increasingly active in the private equity world.
Hello! Each week, I'll be sharing practical tips and strategies for improving your life and building wealth. Subscribe now to receive these valuable insights and start making progress towards your goals today. It only takes one second and is completely free.
When money comes in, it has to go out at some point. It can be given away in philanthropy or it can be reinvested in the economy to fuel business growth. Unsurprisingly, in this article, we will explore the latter.
Lately, there have been a lot of celebrities announcing the launch of their private equity funds. Of course, it is rare to see them launch their venture capital (VC) or private equity (PE) fund on their own because they often partner with seasoned investment professionals with a strong track record of successful deals.
In this article, we will explore why this is trendy and why it will be more common to see celebrities leveraging their fame to do business in the venture capital and private equity world.
What Private Equity is
Let’s make a quick summary of what private equity is. Private equity refers to funds that invest in non-listed companies. These funds come from capital from high-net-worth individuals, institutional investors, and other sources. Private equity firms acquire ownership in these private companies, manage them, and then sell them off at a profit. Private equity investments can range from small start-ups to well-established companies looking to expand or restructure.
The Most Active Celebrities in Private Equity
From professional athletes and actors to hip-hop stars, many have been active in venture capital and private equity investments over the past decades.
Alex Rodriguez: the former baseball player founded A-Rod Corp, an alternative investment firm focused on real estate, private equity, venture capital, and media, in 1995. Today, A-Rod Corp has over 50 portfolio companies with a total Enterprise Value of over $1 billion.
Ashton Kutcher: the actor co-founded the VC firm SOUND Ventures in 2010 and has already invested in more than 60 early-stage and mid-size technology companies such as Uber, Spotify and Airbnb.
Serena Williams: the former tennis player co-founded the VC firm Serena Ventures in 2017 and has raised $111 million in 2022 and invested in more than 60 start-ups led by under-represented founders such as women and people of colour.
Stephen Curry: the basketball player founded the investment and philanthropy venture SC30 in 2017 and has invested in over 15 technology start-ups.
Shawn Carter aka “Jay-Z”: the hip-hop singer co-founded with former Walden VC general partner Larry Marcus, the $325 million VC firm Marcy Venture Partners in 2019 to invest in Consumer & Culture companies.
Blaise Matuidi: the former football player co-founded the VC firm Origins in 2021 and has invested in over 10 early-stage consumer technology companies.
Kim Kardashian: the star of the reality TV show “The Kardashians” co-founded with Jay Sammons, a former executive from the Carlyle Group, SKKY Partners, a next-generation consumer & media private equity firm, in October 2022. They are currently looking to raise over $1 billion.
Carmelo Anthony: the basketball player formed in February 2023 a $750 million private equity fund, Isos7 Growth Equity, to support diverse founder-led companies.
Why Celebrities Are Getting Involved
Based on the few above examples, we can notice the following characteristics related to celebrities getting involved in venture capital and private equity:
Co-founded their venture capital or private equity firm with an experienced investment professional
Invest in innovative Business to Consumer (BtoC) companies, especially in the consumer goods, sports, media and entertainment industries
Leverage their personal brand to support causes they care about
Also, while private equity funds have traditionally been the domain of institutional investors and finance professionals, celebrities have started to take notice. For one, private equity funds offer the potential for significant returns on investment.
With the current uncertain macro environment, more and more celebrities are looking to diversify their portfolios beyond the stock market and real estate. Private equity is an attractive option for those looking to maximize their returns.
But, it's not just about the money. Many celebrities are also drawn to the world of private equity funds because of the opportunity to have a more hands-on role in the companies they invest in. With private equity, investors can work closely with the companies they back, offering guidance, mentorship, and strategic input. And this level of involvement can be incredibly appealing to celebrities who want to have a more active role in their investments.
In conclusion, I think there will be more and more private equity funds co-founded with celebrities, as attention is the new gold and benefiting from their striking power can be a great way for companies to take off.
And you? Which celebrity will be the next one to launch a venture capital or private equity firm? My bet is on Lebron James! Let me know what you think in the comments.
I hope you found this article interesting.
Have a great week!
Isaac
Thanks for reading my article! If you found it helpful, please consider subscribing to the newsletter and sharing it with your friends and colleagues. Your support helps me create more valuable content like this.