HotStart's Scott Van den Berg: Pay Celebrities in Equity, Not Cash

Of roughly 1,000 celebrity- and creator-founded brands tracked in HotStart's CRM, 280 never reached the market — and the firm invests in only 1% or 2% of what it reviews. Scott Van den Berg, who launched the New York-based VC in 2024 to back celebrity brands, says the difference between the survivors and the failures comes down to three things: a better product, an operator who has scaled before, and a famous founder paid in equity rather than cash.

"Equity is always the right answer when you want celebrities to really be involved in your company and really lean in with their full platform," Van den Berg said.

What does HotStart actually back?

Before HotStart, Van den Berg worked on more than 30 celebrity equity deals at Influencer Capital, a firm now folded into HotStart. The new firm's partners include Jessica Alba's The Honest Company and MrBeast's Feastables — operators who built celebrity brands from the inside. That experience, he says, lets the firm advise founders on what it takes to build a billion-dollar brand with a celebrity attached.

Failures draw outsized attention, he argues. He estimates 90% of companies without a celebrity founder also fail within three years, largely unnoticed. "When a celebrity brand fails, everyone will write about it," he said.

Why does fame only win the first purchase?

The brands that closed, in his view, led with fame as the business model. Some celebrities watched Rhode and Casamigos sell for a billion, decided their millions of followers were enough, and asked what product might fit their audience instead of what problem many people have.

"We don't need another hydration beverage. There are already tens of thousands on the market," he said. Without a better product, a celebrity brand has "no right to win."

He points to Logan Paul's Prime and Alex Cooper's Unwell Hydration, where customers complained about quality, tried the drinks once and didn't return. Sales spiked early, then slid. "The celebrity might help you sell the first product, but the quality of the product is going to determine if people are going to buy the second, third and fourth time," he said.

Positioning compounds it. Shoppers think of Prime's founders first, while Once Upon a Farm, co-founded by Jennifer Garner, calls up quality and mission. Alex Cooper's media business and her beverage brand competed for her focus. "Just because she's a great media entrepreneur doesn't mean she is a great beverage founder," he said. Messi, still playing at a high level, had no time to visit retailers and sign bottles. By contrast, Jessica Alba stepped back from acting for seven years to build Honest.

Why is cash a red flag?

Van den Berg has seen deals where a celebrity takes a 10% stake and also wants $3 million upfront. "I'm not gonna pay anyone to be an entrepreneur. Either they want to do it, or they don't," he said. The objection is margin: a co-founder promotes for free, so the brand keeps the marketing margin and scales faster. A creator paid $25,000 for a post delivers what the contract says; one with a stake makes introductions and shows up at retailers unprompted. "When they have equity, they start to act like owners," he said.

How should founders protect themselves?

His fixes: vest the stake and test the relationship first. The same 20% can vest over four years, so a failed partnership costs only part of the stake. He compares a co-founder to a marriage that runs five to 10 years before an exit. "You're not able to find out if someone is the right fit by meeting them three times over Zoom," he said. Test with product seeding, affiliate deals or a small cash deal first — even $25,000 per post is "still cheaper than actually giving up 20% of your company to the wrong partner."

What comes next?

Van den Berg disputes talk of investors pulling back, saying he sees more deals than ever. He cites Tom Holland's BERO and Glen Powell's Smash Kitchen as brands scaling to tens, sometimes hundreds, of millions of dollars within months, and expects exits of $10 billion or more if the next wave is built on real innovation.