

Why isn't there more investment in new media startups? - jedwhite
http://blog.jedwhite.com/2009/05/why-isnt-there-more-investment-in-new.html

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joshu
As an occasional angel, I tend to avoid media production - it doesn't scale as
well as one might like.

While it's not as flat as consulting (one hour's work gets sold once) the
maximum leverage on one hour's work is a multiplier based on the distribution.

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Frocer
So, basically it's hard to make a quick buck?

But looking at history, while media-centric companies take a longer time to
mature, don't they also typically have much bigger exit?

Also, what's your take on user-generated media vs. editorial?

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joshu
I am allocating dollars to the things that are most likely to pay out.
Standard portfolio allocation exercise.

The problem is that it's hard to get any payout at all if the growth doesn't
fit certain parameters.

It doesn't mean these aren't good business to be in. It's just hard to want to
make a very illiquid investment.

I'm not sure that UGC and editorial control are in opposition.

As my background might imply, I'm fond of user curation...

(We need a better term than "user")

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trib
My view, as an outsider who has never raised money for a startup, but that
watches the industry with a level of professional interest is that media
startups aren't an obvious sell for investors. Why? Content. They need users
_and_ content to sell. So, Flickr is obvious, but random new content based
startup, not so much. With tech startups, it's different - there's potential
for value add to the bigger fish. An obvious sell-by date.

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jedwhite
I think you're right about the sell-by date too.

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brandnewlow
Because the "tech startups" can lift the best bits of content from the "media
startups" under cover of "fair use" without having to pay any of the costs. As
long as the law fosters, encourages and protects selective content-theft, it's
senseless to back a business that intends to create new content.

Why back a team of creators when you can back 2 guys who can write a program
that can lift the best information from their stories as well as everyone
else's stories at near-zero cost?

I doubt VCs dislike media startups so much as they dislike making obviously
bad decisions. If we lived in a legal environment that said the guys behind
Reddit had to pay royalties to the stories they linked to, things would be
very, very different.

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jedwhite
Anyone out there trying to get a new media startup off the ground and raise
money for it? I'm working on a tech startup and there seems to be a lot of
interest in early stage tech. But new media doesn't appear to have the same
appeal.

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pclark
media producing startups have massive content creation overheads. My startup
is an aggregator: do you mean media creators?

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jedwhite
No, although content creators would be one type of "media-first" rather than
"tech-first" business I think. I think there will be an entirely new class of
"curation" style businesses that are driven by media ahead of technology.

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dazwal
VCs don't like content businesses.

