VCs see opportunity in blogosphere
Venture investors normally cite the strength of a company's management team as a key reason for investing in new technologies and ideas. But two new venture investments in widely read blogs have taken this concept to a new level: investing directly in people for the content they produce.
Context & Ripple Effects
Venture capital has been drifting toward people-as-assets for most of 2006: back in January, Mark Evans asked in A New VC Model? whether funds might underwrite individuals rather than companies, and the question has circulated since. What CNET reports today makes it concrete — two new investments go straight into widely read blogs, on the strength of the content their authors produce rather than any product or team around them.
The idea got same-day amplification when Don Chase-style commentary followed on Don Dodge's The Next Big Thing, asking whether individual blogs deserve funding at all — evidence the debate is live among operators, not just journalists. The bet being tested is whether readership alone is collateral.
First-order effects
- The two funded bloggers immediately hold venture capital against no asset but audience, setting a reference price for what a widely read independent blog is worth to an investor.
- Other venture firms evaluating deals now have comparables: traffic and voice become diligence metrics alongside management teams, exactly the shift the funded deals embody.
Second-order effects
- High-traffic bloggers who have not raised become a visible target pool, and the scarce input — proven audience — starts getting bid up the way early-stage teams are.
- Ad-supported blog networks and media buyers face a new competitor for top voices, since venture money lets a blogger decline acquisition or ad contracts and keep publishing independently.
Third-order effects
- If audience-backed investing proves out, the line between media property and venture portfolio blurs structurally: returns would come from attention and influence rather than exits, a model whose economics are unproven as of August 2006.
- Regulatory and reputational questions follow naturally — disclosure of investor-backed editorial is not yet standardized, and pressure to formalize it grows with every such deal.
The trend: Venture capital is extending its underwriting from companies to individual content creators, treating audience as investable collateral.