BuzzFeed is planning a major expansion fueled by a new $50 million investment from leading venture-capital firm Andreessen Horowitz.
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On Monday, BuzzFeed said the Series E round of financing would be used to grow its editorial operations, pursue a potential foray into television and feature-length film and expand its advertising arm. The digital publication will also launch international editions in Mumbai, Mexico City, Berlin and Tokyo this year.
“Over the last decade, traditional media has been upended by technology, a disruption of the print, video, news, entertainment and advertising industries that is now accelerating at lightning speed. We created BuzzFeed because people still want to be informed, entertained and inspired but the way they consume media has dramatically shifted,” said BuzzFeed founder and CEO Jonah Peretti in a statement. “Today we think the time is perfect to grow our company, build our brand and greatly increase the content we are producing so we can be the number one digital media brand. The investment from Andreessen Horowitz will allow us to double down on our company’s mission by creating a new organization and expand rapidly in all areas.”
With the new financing, BuzzFeed is now reportedly valued at $850 million. The company said the funding will provide it with a foundation to incubate and acquire new companies as part of its expansion.
“As a small, early investor in BuzzFeed, I got to observe firsthand how effectively Jonah and the team executed in recent years. The results speak for themselves: BuzzFeed now reaches over 150M people per month, is consistently profitable, and will generate triple digit millions in revenues this year. I believe the future of BuzzFeed – and the media industry more generally – will only get brighter as the number of people with Internet-connected smartphones grows, and the Internet solidifies its place as the central communication medium of our time,” said Chris Dixon, a general partner at Andreessen Horowitz. Dixon will join BuzzFeed’s board of directors as part of the investment.
In a blog post published Sunday, Dixon compared BuzzFeed to Tesla (NASDAQ:TSLA), Uber and Netflix (NASDAQ:NFLX).
“The most interesting tech companies aren’t trying to sell software to other companies. They are trying to reshape industries from top to bottom,” wrote Dixon. With technology at its core, added Dixon, BuzzFeed is primed to take on an increasingly mobile world.
Altimeter Group analyst Rebecca Lieb said she was surprised at the size of the round from Andreessen.
“It’s a lot of money, but they demonstrated that they can very effectively leverage online content both in a technological way and in terms of the quality of that content,” said Lieb. “In order to thrive, BuzzFeed has got to take its business model and its content beyond this viral social media model.”
Lieb applauded BuzzFeed's native advertising work, in which the company’s staff creates content for advertisers that mimics the site’s own viral lists and memes.
“Native advertising is a premium advertising product that publishers can charge a lot more money for than traditional banner ads,” explained Lieb.
And despite BuzzFeed's recent plagiarism scandal involving ex-editor Benny Johnson, formerly one of the site’s most popular writers, Lieb said BuzzFeed is well-positioned to grow into a mature, well-respected media company.
“[BuzzFeed] appeals to a young and elusive audience that is suspicious of in-your-face, interruptive advertising, that is very elusive to reach … They don’t read print, they don’t have cable television. They’re not just digital natives, but they live in an exclusively digital media environment,” she said. As Gen Y grows up, Lieb added that the number of print subscribers and broadcast viewers is only going to shrink, as digital’s market share swells.
While Lieb said BuzzFeed is likely to want to stay independent as it expands into new categories, she said traditional media companies will surely be keeping a close eye on it.
“Somebody like a News Corp. could see BuzzFeed as a potential acquisition,” said Lieb. “I don’t know if that’s where BuzzFeed wants to go … but of course, anything is possible.”