Recently, Quartz published an analysis titled ‘Why Venture Capitalists Are Suddenly Investing in News’. The article made for some interesting discussion on the convergence of media and tech. The reality, however, is that VC funding to digital news and media startups has been ramping up for quite some time.
Last April, Skift CEO Rafat Ali dubbed the rise of financing and interest to media upstarts as ‘the dawn of fat content.’ And while our earlier research found that venture-backed content companies saw over $140M in the four-quarter period through Q1 2013, the data shows that financing activity saw a substantially greater uptick through the end of 2013 as VCs and corporate media investors deployed over $330M across 60 deals last year.
On a year-over-year basis, funding to content startups (ranging from blog networks and newsletters to GIF hubs and verticalized media hubs) increased a notable 117%. Deal activity, meanwhile, grew over 30%.
Financing Trend By Stage
Interestingly, while several startups specializing in publishing have indeed ‘fattened’ up with large, late-stage rounds over the past two years, half of all deals have come at the seed/angel stage. Nearly 1/4 of deals went to startups raising mid-stage financing at the Series B and Series C stages.
Financing Trend By Deal Size
Checks to digital content startups have also been on the rise. Q4’2013 saw an eight-quarter high for average and median deal size driven by double-digit rounds to companies including Stripes Group-backed Refinery29 and Accel-backed Vox Media.
Exit Activity
While M&A exits to The Huffington Post and Bleacher Report may have spurred interest in building and financing new publishing startups, most acquisitions in the last year have been small-ball at best. How heavily-funded companies fare on the exit front moving forward will influence VC financing to emerging publishers and digital content upstarts.
