Time to make the money

They will lay money at my feet and I will
rule the Blogosphere

VCs see opportunity in blogosphere

By Staff, TheDeal.com


Story last modified Mon Aug 21 08:45:02 PDT 2006

Venture investors normally cite the strength of a company's management team as a key reason for investing in new technologies and ideas. But two new venture investments in widely read blogs have taken this concept to a new level: investing directly in people for the content they produce.

Earlier this month, SoftBank Capital of New York led a $5 million first round of funding for political-group blog HuffingtonPost.com, the site operated by columnist and one-time California gubernatorial candidate Arianna Huffington.

Increasingly viewed as an alternative to traditional mainstream media, the blogosphere is variously regarded as more opinionated, faster-moving and less factually reliable than other outlets, including an older generation of online journalism. As SoftBank's Eric Hippeau pointed out, the popularity of blogs may hold clues to how news will travel in the future.

"We view this as an investment in a news site," said Hippeau, whose firm invested alongside Apax Worldwide Partners co-founder Alan Patricof. "We think the news of the future will look like The Huffington Post. It includes breaking news, instant commentary, blogs and community, with a comments section that can be almost like a miniblog."

Similarly, Malik's blog is notable for breaking tech stories nearly every day, particularly in the areas of broadband Internet and the new communication technologies collectively known as Web 2.0. Malik offers opinions, speculates on future possibilities and responds to others in the blogosphere, creating a site widely regarded as a must-read among Silicon Valley watchers. The site now includes additional entries from four other writers and sports a support staff of five.

Although investing in an individual seems risky, both sites are diverse enough to distinguish themselves from the stereotypical pajama-clad individual spouting off unfiltered remarks. Hippeau said the depth and breadth of contributors and topics found on HuffingtonPost differentiated it from other blogs, and GigaOm's recent redesign seems to foretell a future as a more ambitious media company.

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Blogs don't depend on a management team like dotcoms did. If the person running it is sane, then the management is sane. You don't have to worry about some best friend fucking things up because he helped the founder across the quad in the snow while drunk.

Blogs are nice, self-contained units with low overhead and a confirmed product and audience. I don't think VC's will be visiting here any time soon. But the larger the audience and the better the work, the more likely it will attract investment. Which is why Ass Clown Media isn't getting sniffed around. Would you place money in to LaShawn Barber or Little Green Fuckups, or ReichStat? God no.