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I’ve spent the past eight months or so talking to as many news startups as I can — 16 so far (from Buzzfeed to News Deeply to Medium). From all of this, it seems there are a variety of strategies a news startup might take to getting funded, getting “runway,” and having a successful future.

1. Develop a technology product

As I’ve written, venture capitalists are really into a news startup that can offer some sort of great technological innovation. Whether it’s a content management system that’s going to change the world, some sort of platform (think Medium), or innovations in social distribution and data collection (think Buzzfeed), a news company that bills itself as half-news and half-tech has gotten a lot of favor with VCs so far.

2. Develop a diversified business plan

Gigaom may be the best example of a diversified business plan. And it’s now in Series F funding — with $22.3 million to its name since it started in 2006. But Gigaom isn’t just content. There’s free content, paid content, events and even a specialized research department. Re/Code, Kara Swisher’s outfit, is another big event producer. And Geekwire, which I wrote about here, does a super fancy awards banquet for the Seattle startup community.

3. Get a technology entrepreneur angel

Easier said than done, right? But if you look across every VC-backed startup, life begins with an angel. Tech entrepreneurs really are angels in the traditional sense of the word, depositing what is just a tiny bit of money to get a project started. But getting a tech entrepreneur in your pocket is huge. Ozy got some instant cred with Laurene Powell Jobs (wife of Steve Jobs) as an early investor. Of course, there are the mega supertastic investors like Pierre Omiydar, who has promised a quarter of a billion dollars to First Look. Now that’s an angel.

4. Bootstrap

Without initial outside investors (aside from maybe friends and family), the best choice a startup might have is simply to bootstrap. There is nothing more purely entrepreneurial than putting every cent you’ve got into a labor of love, risking it all and hoping it will work. Laura and Chris Amico, founders of Homicide Watch (the District of Columbia site is currently facing a shutdown), bootstrapped for four long years and I’m still not sure how. News Deeply, Lara Setrakian’s outfit best known for its fantastic single-subject news coverage of Syria (Syria Deeply) and now Ebola (Ebola Deeply), bootstrapped and the company is now fully in the black.

5. Have a plan to sell your startup to a media company

We’ve seen a real boom of this, as I’ve written about here. If you have a service that a media company really needs (like Storyful or Demotix, which worked to verify and gather citizen content — generally a seriously labor intensive task), you stand a good chance of selling your startup. If you threaten a company with disruption, they just might buy you, as with Summly and Yahoo. And if you have some shred of a business idea that a news organization is grasping to make work on a bigger scale, that’s another way (think Blendle and The New York Times).

6. Capture a demographic

The most obvious example here is Buzzfeed and millennials. But take a look at Bustle— which has $5 million in funding from Time Warner Ventures — the super-visual site that promises to provide a “fresh spin … on any and all subjects that concern women.” Another favorite of my students, BroBible (don’t ask), is the “ultimate destination for bros.” BroBible was acquired by Woven Digital, a company that “aims to be a Viacom for digital,” according to Forbes.

Woven’s roots are in reaching young men. According to Forbes, Woven co-founder Scott Grimes “noticed a hole” in the 18- to 34-year-old male demographic. “The space was wide open. No one was really looking at what works for young men in digital at the time.”

7. Go niche

Related to capturing a demographic, capturing a niche and doing it well is one way of getting over the obsession with scale. Particular niches are especially loyal and attractive to advertisers. Tech sites have done well at capturing the tech niche, and it’s actually surprising how many of them can survive. But each site provides a different set of must-know information (at least theoretical) and compete with each other in a thoroughly exciting golden age for Silicon Valley journalism.

Another great illustration of niche is sports. The obvious success story of niche gone scale is Bleacher Report. It’s gotten $40.5 million in venture funding, according to Crunchbase, and was acquired in 2012 for approximately $175 million by Time Warner. Seriously. SBNation, a Vox Media site, is another venture darling. Vox Media raised about $34 million to develop the site.

8. Scale

OK, this is the obvious one. Every VC is going to be looking for scale. Can the product grow and actually make some kind of major and significant impact on the world? The reality is that most products won’t – there is a limited attention economy, the Web’s political economy favors first-movers and big sites, and if there were a magic formula to scale, everyone would be doing it. Scaling is a dream. We can identify the sites that have scaled – they are the shining examples of startups that everyone can name.

9. Make a case you can capture digital advertising

Maybe you’ll be grasping at straws, but someone might believe you. If you’ve got that niche content, then you can draw in advertisers. Perhaps your claim to having really unique content will convince funders that you can attract eyeballs and advertising. Maybe you are video-centric and have a built-in advantage with the most promising form of digital advertising. Or maybe you have a unique plan to do branded content so that digital ads take on more sophistication, add to reader enjoyment, and even perhaps enhance your content.

10. Go social

One of the quickest ways to scale is to go social. Again, Buzzfeed is a prime example, but so is Upworthy. Social connects people through a network of trust: friends recommending products and services to other friends. And there’s also the potential for constant reminders to take advantage of your product when people use your site. Other ways to go social may be to build social features into your apps, such that those connected to each other through the app can get a sense of what their friends are using. Social adds to spread, but it also brings a sense of loyalty.

11. Go personal

Many news aggregators are creating personalized apps, as I’ve written about here in the Columbia Journalism Review. Personalization relies on algorithms that literally know your preferences perhaps better than you know your own. Claiming superior personalization algorithms is a compelling one for investors (just think about Facebook), and fits in well with the larger culture of the Web.

In sum, here are 11 things to think about when starting your news startup or developing that business plan. Each step is not mutually exclusive; you can go niche and scale, for example. But these strategies map well to the different claims that the startups I’ve looked at say attracts them to investors. Now let’s see what you can do to give your project a whirl.

Nikki Usher  
   
Nonresidential fellow


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