Surviving the recession: blog networks raise good money in 2009
Despite tough economic times and a drop in venture capital funding in web companies, blog networks and their derivatives have received strong funding in 2009 and investment in the sector would appear to be accelerating.
Funding for blog networks and similar entities has previously tended to be small scale investments but recent rounds show an increasing interest in content as a business model. For the sake of this post content plays that might not immediately be labeled blog networks are counted, for example sites like Associated Content and Examiner.com run an uber-blog model, as does The Huffington Post. The core difference is that where the traditional blog network included multiple blogs, the uber-blog model revolves around a single destination/ brand with many sub-blogs or content streams.
Here’s a few highlights from the year so far: BuzzMedia ($12.5 million), Associated Content ($6 million), Business Insider ($5 million), Sugar Inc ($16 million), High Gear Media ($5.5 million) and SB Nation ($8 million)…and that’s just the ones we can recall on short notice. Examiner.com is backed by the Clarity Media Group (a subsidiary of The Anschutz Company) so any funding is off the books, and others attract private investment. Even going back to late last year you can also add GigaOmni Media with $4.5 million in October 2008 and the Huffington Post with a cool $25 million in December 2008.
I spoke with a source who was involved with one recent deal, and he told me that content is being seen now as a safer investment than untried Web 2.0 product startups. He explained that online content providers such as blog networks had proven business models and that the sector continues to grow as the broader media industry struggles.
It does help that in 2009 that many have tried and succeeded before hand. The Huffington Post (rightly or wrongly) is often held up as the shining light of what is possible, but a range of blogs beneath have also proved that the sector is a sound investment. At the height of the Web 2.0 boom, content plays were decidedly unsexy and struggled to attract serious funding, but how many funded content plays are still going today vs the sea of Web 2.0 product startups that failed sometimes as quickly as a year from launching.
The blog network/ online content market is still small fry compared to some of the funding being spent in social networking startups, but it is a sector that continues to grow while others have declined. With newspapers going out of business, and the reemergence of hyper-local in a more sustainable form, my prediction is that VC investment in the sector will continue to grow for at least the next 2-3 years.