A Comparator Analysis

By Austin Schoff

In November 2016, OnlyFans was launched in London. In the five years since its founding, the company has paid out over $3.2 billion to its creators and is projected to have over $1 billion in revenue for 2021. The site has seven million paying fans. Yet, OnlyFans has struggled to secure funding from outside sources. Rivals of similar size such as Patreon have been wildly successful at raising capital in what feels like the Golden Age of late-stage growth investing; why does OnlyFans have this issue?

Venture capital firms have a much stricter investment requirement than standard buyout/growth private equity firms; however, a tech-focused fund could easily incorporate OnlyFans into their portfolio without violating their mandate. So if the potential institutional backers of OnlyFans can escape that hurdle, why are they so hesitant to invest in a fast-growing company? 

I believe that the adult content on OnlyFans (while not the majority of content) is what is keeping potential investors away. Private Equity funds are reliant on limited partners such as university endowments and foundations; given the press that OnlyFans has received in the media as the main hub for adult content, it is understandable that a major charitable organization or college would not want to tie the growth of their portfolio to OnlyFans.

OnlyFans responded to this by promising to ban all adult content from the site. However, this decision was rescinded days later. While this may affect OnlyFans ability to solicit capital from funds, I believe this was the right move for two reasons.

First, OnlyFans is not in a position to need major outside capital. Because of low overhead costs and limited production costs, OnlyFans can use the revenue generated from channel subscribers to more than cover costs and grow the business organically. Second, and most importantly, OnlyFans took into consideration the opinions of their stakeholders (the creators) more so than they did potential shareholders. By protecting the interests of its stakeholders, the company can retain top talent. The talent on the app is what drives subscribers and eventually future creators to join the app.

While OnlyFans may eventually struggle to have a liquidity event, the company’s executives made the right decision to empower their creators. Keeping the people who bring in the revenue happy will keep the user base happy. Keeping the user base happy keeps revenue coming in. 

This is why at Couro we believe that it is essential to empower our content creators at every step of the way. You are our partners as we work to make the sports world more equitable and provide coaching to any athlete who seeks it.