Do Online Publishers Need Venture Capital?
The short answer is yes and no. Online publishers with a strong following on social media, that is indexed frequently by Google and other search engines, and have found a way to successfully monetize its product does not need any venture capital. These types of businesses should start small and grow organically, expanding their audience and revenues simultaneously. When the business reaches the point where it can compete globally and become one of the top listed websites on ComScore and Alexa, then it would be appropriate to seek venture capital to help scale the business to hundreds of thousands or millions of readers around the world.
Starting with Venture Capital
It has been over 20 years since the bursting of the .com bubble. It is now very challenging to pitch an online publishing platform to venture capitalists who are increasing likely to view the business model as out of date. Venture capitalist are less likely today to make investments in online publishing before there is a viable product with an audience. Also, the founders of the organization would have to give up some of their creative freedom in exchange for the capital should they make a successful deal. The venture capitalist may want to steer the company in a new direction, hire employees that they trust, and incorporate business ideas that a founder may not be interested in.
Generating Revenue
For online publishing businesses, the founders should create a business plan that details what the product is, who it is reaching, and how scalable is the idea. Creating an online publishing space is not like reinventing the wheel; there are so many successful entrepreneurs that have created some of the internet’s biggest platforms by adopting proven strategies. Two of my favorite entrepreneurs to read about are Arianna Huffington and Jonah Peretti, each of whom created the Huffington Post and Buzz Feed by following the same formula that all online publishers have to follow. New entrepreneurs with a publishing platform that has a new twist or angle with their articles may find it easier to generate revenue without an investor in the early stages.
Should Successful Publishes look for Venture Capital?
It depends on the founder’s goals. If he or she is managing the website as a hobby and wants to use it as a way to make extra money, then no investor is required. The founders who want their publishing platform to scale to the highest number of visitors will most likely need a venture capitalist to help provide them with the resources necessary to reach a broader audience through the search engines and on social media.