posted at 10:50
Author: Nicholas White, Daily Dot
Sun, 29 Jun 2014 17:31:05 +0000
Caveat Emptor: Why the current VC/Media marriage may be bad for journalism
Now, all of a sudden, there is a kindling of interest in media companies among VCs - far too little yet to be called a frenzy or a bubble, but far more than we have seen in years. Between recent multimillion dollar rounds from Buzzfeed, PandoDaily, Business Insider, Vox, and Vice, it seems VCs have recognized the potential for media as an investment. The recent State of the News Media from Pew Research reported record levels for investment in the future of news and journalism. A large number of so-called "Media" labs and venture funds focus on companies that are not actually media - there is no content-producing component within them. VCs need to better understand the unique nature of the media and gauging the returns on their investment. VCs are dependent on "Exits," and because that is most often exit by acquisition, media just doesn't provide the kind of potential exit upside that VCs can get in other investments. There seems to be a disconnect driven by the glow of the new relationship between media and VCs that is blinding both sides. Media needs funding, and VCs need new high-growth, high-profile sectors in which to invest.

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