How Fanbase founder Isaac Hayes III became the first Black man to raise $10 million in crowdfunding

BY Preta Peace Namasaba May 13, 2024 7:59 AM EDT
Isaac Hayes III. Photo credit: Isaac Hayes III

In a 2021 study by The Influencer League involving US-based creators, the pay gap between white influencers and influencers of color was put at 29 percent. The margin rises to 35 percent when narrowed further between white and Black influencers. Isaac Hayes III noticed the exploitation of creators and decided to create Fanbase, a social media platform designed to enable Black creators to cultivate their audiences and monetize their contributions effectively.

In a highly competitive venture capital market, Hayes III turned to equity crowdfunding to fund his startup. He is now the first Black man in the United States to raise $10 million in equity crowdfunding.

“We’re not just building a product; we’re growing a community-driven ecosystem where every voice, every creator, and every supporter shares in our collective success. The fact that the African American community owns part of this company and Black culture contributes so much to social media, makes this the perfect marriage between our capital and our talent at the same time. This is how the platform will continue to lift others as it climbs.” Hayes explained the role Fanbase is playing to elevate Black creators.

The son of legendary R&B producer and singer Isaac Hayes, Hayes III was made aware of the exploitative practices by record labels toward musicians. He would go on to observe a similar pattern with the way users creating content for social media giants barely reap from the billion-dollar revenues earned by these corporations. This revelation moved him to action.

In 2018, Hayes launched the software company Fanbase to help underpaid content creators monetize their name and influence. He was betting on the continued decline of legacy media companies and the emerging trend of smaller direct-to-consumer interactions becoming the new normal. From the reign of traditional TV broadcasting to streaming with the likes of Netflix, the media landscape is transitioning to the mass adoption of microcasting where people subscribe to social media personalities and channels at a cost. Fanbase differentiates itself from other platforms by ensuring creators can make money without brand partnerships or ad placements.

The platform integrates various media features such as photo and video sharing, live streaming, and short to long-form content. Followers can subscribe monthly to access exclusive content from their favorite creators or spread love. Love serves as the primary form of engagement on Fanbase allowing creators to monetize their content. Revenue earnings correspond directly with the number of likes and love they get. Anyone can create a profile, build a following, and connect with others as the app is free to download and use.

Following the recommendation by his mentor and an off-putting conversation with a venture capitalist, Hayes decided to forfeit traditional venture capital fundraising. He took the equity crowdfunding route which allows companies to raise capital from the general public. He used a platform called StartEngine and has since managed to get many well-known investors such as Snoop Dogg, Charlamagne The God, and Kandi Burruss on board. Hayes has shown that African American entrepreneurs can access much-needed capital without relying solely on banks or venture capital firms.

“The most important investors on Fanbase, and we have some really big, big name investors, the most important investors on Fanbase are the actual users, the larger, broader, probably a sea of 8000 plus individuals that have put their money in and actually use the platform on a day-to-day basis, who will be those day-to-day, you know, hardcore super users,” Hayes said about building community through equity crowdfunding.

From spending $200,000 of his own seed money,  Hayes has managed to raise over $10 million for Fanbase. He is now the first Black man in history to raise such a substantial amount in a seed funding round on StartEngine in a Regulation Crowdfunding campaign. Investors in the startup have the opportunity to receive dividends if the company decides to distribute profits to shareholders or experiences a liquidity event, such as going public or being acquired. Fanbase currently has more than 400,000 users and is valued at around $85 million, with revenues coming from subscriptions and transaction fees associated with user engagement.

The company has recently kicked off a new $17 million Regulation A series equity crowdfunding campaign. The public has a chance to invest in the expansion of the team and contribute to bringing more money into creators’ hands. Hayes plans on growing the development team and scaling verticals with the incoming funding. He is intent on creating a space where everyone’s ideas are protected and creatives have the right to maintain control and ownership of their content.