- Lukas I. AlpertThe Wall Street JournalCANCEL
Jan. 29, 2015 12:01 a.m. ET
Big money is beginning to wash over the new media landscape.
Both Mashable and Business Insider are expected to announce significant venture capital investments Thursday, building on a recent trend of hefty cash infusions and valuations for the sector’s biggest players.
Mashable, a decade-old site focused on technology, entertainment and business news, will receive $17 million in a funding round led by
Investments, the investment arm of Time Warner Inc. Business Insider, which was founded in 2007, will receive $25 million from a group of investors led by a unit of German media conglomerate
Axel Springer SE
that also includes Amazon founder
“We firmly believe that journalism has a bright future in the digital space and that the business model will grow,” said
Axel Springer’s president of marketing and classified ad models, who will join Business Insider’s board.
In the past six months, venture capitalists have pumped money into online media, including a $50 million investment in BuzzFeed, $500 million investment in Vice Media Inc. and $46.8 million investment in Vox Media. The investments valued BuzzFeed at $850 million, Vice at $2.5 billion and Vox at $380 million. Officials at Mashable, Business Insider, Axel Springer and Time Warner Investments declined to discuss valuations for the new investments.
“What is key to this investment wave is that we have figured out the business model and it is clear we are able to generate revenue in a reliable and predictable way, so [venture capitalists] see we are a real business and we are creating real revenue,” said Pete Cashmore, Mashable’s founder and chief executive. He said Mashable’s revenue grew 45% in 2014.
A person familiar with Business Insider’s operations said the site became profitable in the second half of last year and that revenue grew steadily throughout the year.
“Seven or eight years ago there was so little belief that digital content and media could be viable, that raising $100,000, $200,000 was a lot of money,” said
CEO of Business Insider. “We’re just now getting to the point where investors have enough confidence in the future of new media that they are writing much bigger checks.”
The big media bets, however, rely heavily on business models that are based on new forms of digital advertising, which have yet to fully show they can drive continued revenue growth and provide measurable results for advertisers.
Traffic at both sites has grown steadily in the past year. Business Insider’s traffic rose 55% to 35.4 million unique views in December from a year earlier, making it the most-visited business news site in the U.S., according to analytics firm
Mashable’s traffic grew 17% in 2014, with 19.2 million unique views in December, comScore said.
As money continues to pour in, it is also becoming clear that additional cash may be needed to stay competitive. On Wednesday, new media stalwart Gawker Media, which has long shunned outside financing, announced it would seek to raise $15 million through a loan structure to invest more in technology.
Both Business Insider and Mashable said they intend to use the cash to expand their video operations, an area that has been considered as a possible driver of future revenue growth as advertising dollars increasingly shift from television to the Web. Both sites also said they intended to go on hiring sprees, adding 100 new employees each in 2015, which would bring staffing at Mashable to about 270 and to around 300 at Business Insider.
Following Thursday’s investment, Mashable will have received a total of $31 million in two funding rounds, while Business Insider will have raised nearly $57 million in seven rounds.
Time Warner Investment’s managing director, will take a seat on Mashable’s board.
Write to Lukas I. Alpert at email@example.com
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