Deal focus: Russell Simmons backs Singapore's Gushcloud

Russell Simmons, the US hip-hop mogul best known for co-founding music label Def Jam Recordings, got in touch with Althea Lim over a year ago while building a broadcast network for Yoga influencers. He was researching YouTube yogis and found that six of the top 10 were represented by Gushcloud International, Lim’s digital talent agency.

“I came to Singapore, saw her operation and we started to talk about all the people she represented and the countries in which they had influence,” Simmons explains. “I thought they could influence every form of American endeavor – and the potential to build bridges was what excited me. I saw a giant white space, a hole big enough to drive a truck through, where China and America and East Asia and America had no bridges.”

This notion of building brands around US athletes, musicians and actors in Asia and doing the same for their Asian counterparts in the US led Simmons to participate in a $11 million funding round for Gushcloud. Further contributions came from an array of Southeast Asia and Korean VC firms, including GDP Venture, Kejora Ventures, Golden Equator Capital, KB Investments, and Korea Investment Partners.

Pivot, pivot

The company was established in 2011 by Lim and Vincent Ha, both of whom come from Singapore, as a platform that matched brands with influencers. Within a year, it pivoted to become a marketing agency, running campaigns for brands across Southeast Asia. If the likes of Coca Cola or Procter & Gamble wanted to generate a buzz for a new product across social networking and content-sharing platforms, Gushcloud would identify people in the target market who could get the job done.

These activities roused interest from Yello Mobile, a Korean mobile internet company. One of its subsidiaries, Yello Digital Marketing, bought a majority stake in Gushcloud in 2015. The relationship was cordial but ultimately unsustainable as Gushcloud continued its evolution into a digital talent agency. Lim and Ha completed a buyback at the end of last year.

“They wanted to acquire influencer marketing and we were ahead of our peers with a presence in four countries. At the time, we thought we would just be doing advertising, so joined their ecosystem with a view to tapping into their popularity in Korea and other parts of Southeast Asia,” says Lim. “When we realized we wouldn’t just be doing advertising, our visions were no longer aligned so we agreed to part. They want to be the WPP of Asia; we want to be the digital WME [now Endeavor Group] or CAA of Asia.”

Gushcloud has a presence in Singapore, the US, China, Indonesia, Thailand, Korea, Japan, the Philippines, Malaysia and Vietnam. There about 19,000 influencers on its books, including 3,000 are based in the US. Of the 19,000, 300 are exclusive to Gushcloud. Lim estimates that 80% of the business is driven by 20% of the talent.

The company’s priorities are business and geographic expansion. While marketing campaigns still contribute significant revenue, growth will be driven by building brands around influencers: helping them broker deals, develop their audiences, target different digital platforms, and ultimately sell own-brand products. Southeast Asia is becoming increasingly important in this respect as e-commerce and payments infrastructure takes root around social networks. But China remains the crown jewel of influencer markets, purely by virtue of its size and acceptance of the business model. 

The country’s internet key opinion leader (KOL) economy – populated by movers and shakers in areas such as fashion, entertainment and gaming – was worth RMB91.6 billion ($12.9 billion) in 2017, according to Frost & Sullivan. It will reach RMB525.3 billion by 2022. Gushcloud is interested in selling access to brands and cultivating retail sales through social networking channels like Tencent Holdings’ WeChat platform. That will be a RMB462.6 billion market by 2022, up from RMB80.8 billion in 2017.

Standing out

There are already some formidable competitors in the space, notably China’s Ruhan, a KOL incubator that covers everything from product design and sourcing to distribution and after-sales service. The company had 113 KOLs with an aggregate of 148.4 million fans across major social media platforms by the end of 2018. They facilitated transactions worth RMB2 billion in gross merchandise value (GMV).

Gushcloud hopes to differentiate itself by being more international, which is where Simmons comes in. Now installed as company president, he has already opened two offices in the US and is working on building up a roster of American talent to bring to Asia. Simmons describes a breakthrough moment watching J.J. Lin perform in Singapore last year, filming a clip, and sending it to Usher with a suggestion that the two popstars solidify their presence in one another’s markets by releasing a duet. 

“It seems insane to me that some athletes make more money in China than they do in America, yet they have no data on their fans. At the same time, Asian stars are not exploring the opportunities they should in Western markets,” Simmons says. “I’ve always served artists and opened doors for hip-hop in film, television, fashion or even financial services. I believe in the expansion of culture, and this is the same.” 

The immediate goal is to find ways to make Gushcloud’s 300-strong stable of exclusive talent $1-10 million apiece over the next three years. But the company hopes to make a longer-lasting imprint by recruiting 10 international sports stars as pioneers for the platform. Once Gushcloud establishes its credentials with the first batch, others are expected to follow. 

“What struck us was when Russell joined, he opened up networks in America with really good artists who are trying to find a way into China,” says Lim. “Then we spoke to Weibo, Bilibili, and TikTok, and they said we could become the largest ‘haiwai MCN,’ or overseas multi-channel network, in China. That was a strong validation for us. Those social media platforms understand what audiences want and they want American celebrities. We can provide value in that way.”   

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• Topics
• Southeast Asia
• Greater China
• North America
• Technology
• Media
• Early-stage
• TMT
• China
• Kejora Ventures
• GDP Venture