Lately I’ve been thinking about media publishing startups (think Semafor and Puck) and their fundraising rounds.
Semafor recently raised a $44 million seed round, and Puck raised a $7 million Series A in 2021. The Messenger, among the newest in the industry, recently raised $50 million. Publishing media jobs are uncertain, pushing those with an entrepreneurial spirit to start their own companies, giving them more ownership over their work. But compare their experience to that of Dana Amihere, who is still trying to find support and funding for her news media startup.
She launched AfroLA in 2022 to cover the Black community in Los Angeles. So far, she won’t even touch venture capital. The outlook is bleak for people who look like her, she said. People in the startup world keep telling her things are getting better, but “Who are things improving for?” she asked.
“Knowing what the landscape looks like, it almost feels more worthwhile to dedicate the limited time I do have to other things,” she told TechCrunch+. “I don’t think backing Black news outlets is seen as inherently risky. Rather, I think it’s not seen [at all]. Investors don’t see it as a viable or worthwhile investment unless it’s splashy or fits their idea of what Black news should be.”
Part of the problem is that the pool of investors who like investing in media, specifically publishing, is already small. The industry is risky, and not in the startup sense where one might strike big returns one day. Last year the media sector raised a healthy $15 billion, according to PitchBook; within that, publishing raised just $298 million.
Charles Hudson, a managing partner at Precursor Ventures who invests in new media, said that the funding landscape for most media companies, B2B or B2C, is limited when it comes to venture. “What dollars do get invested tend to go to categories that feel big, like national news, industry-specific vertical pubs like Skift or The Information or B2B media companies,” he told TechCrunch+.
“Most investors have had a hard time getting excited about vertical market media publications focused on audiences that are perceived to be small. I think that is because many of these businesses rely on advertising models, which require large audiences to work.”
Rhonesha Byng, the CEO and founder of digital media platform Her Agenda, said she’s come to realize that VC money is “not a healthy source of capital for Black publishers.” She learned this the hard way, she said. “I attempted to fundraise in the beginning, quite frankly, because I did not know any better.”
She took hundreds of meetings before she stopped and went to crowdfunding, doubling down on simply acquiring customers and building out an advertising model.
“The feedback I got from investors I realize now in hindsight was misinformed, sexist, and racist,” Byng said. VCs didn’t like the fact that her company had multiple streams of revenue, she recalled; they didn’t understand that a media company needed diversified revenue streams to be sustainable.
“The VC model requires 10x returns, it often requires the ability to buy growth versus truly investing in growth overtime,” she said. “Black publishers are mission-driven versus purely profit driven. The VC model just does not adhere to these nuances and the business case behind what is needed to make this possible.”
Furthermore, several Black media publishing founders and investors said that raising funds for a publishing startup was already very hard, and those who raise tend to be the elite within the elite, the storied of the monied. Kori Hale, the CEO and co-founder of the Black-focused business news outlet CultureBanx, said they initially wanted venture funding but were repeatedly told that media was broken “given the likes of BuzzFeed and Mashable burning through hundreds of millions of dollars.”
“So there wasn’t a media model that venture capital could support,” she told TechCrunch+. “We decided to look towards alternative funding methods and to build a strong revenue generating and sustained business new company.”
Amihere started looking at grants, where a lot of Black news gets its funding — she called it journalism philanthropy — but said that even that has been a struggle. AfroLA won a large sum through the Google-backed award Data-Driven Reporting Project this year, but it’s still not enough. “We’ll likely have to fundraise to cover the final expenses before that program wraps up next year,” she said, adding that this would probably come from public donations if there’s no investor interest.
Perhaps, then, Black news doesn’t even need venture funding. Capital B News, for example, is a nonprofit news organization founded by Vox Media alum Lauren Williams and Akoto Ofori-Atta, former managing editor of The Trace, a website covering gun violence in the U.S. It focuses on original reporting about the Black diaspora, and has raised $12 million from foundations and small donors.
“Black-led organizations are disproportionately underfunded, and that’s true for Black media, too,” Ofori-Atta told TechCrunch+.
Investors promised to do more to help support the Black community, and even corporations committed to deploying $35 billion toward racial equity. But the odds of a Black-owned publication raising a $44 million seed appear to be nonexistent. Big bets are a key element of venture, and refusing to let marginalized groups take big bets stifles innovation by hindering the dreams children grow up having.
“It’s just one more way they are trying to write us off and keep entrepreneurs like me from owning our narratives along the path to creating generational wealth,” Hale said of the lack of venture capital interest. “Our audiences are worth the money brands are willing to pay other outlets.”
Perhaps this is an overlooked opportunity, even in the form of angel or impact investing. There are many growing media empires and startups operating on financial straps and not much advertising.
“Investors need to walk, not run, toward pouring capital into Black-owned media,” Hale said. “Whether that’s through getting their LPs educated on the importance of these companies or using donor-advised funds of family offices. Investors can move the conversation behind just traditional investing models for Black-owned media to help them secure capital.”
Amihere has 10 years of experience within media and also runs her own data consulting business. “If I can do these things for others and teach these things to others, why can’t I gain barrier-free access to the resource I really need — capital — and be trusted to manage it wisely?” she said.
Brian Brackeen, co-founder of Lightship Capital, just launched the media company Black Tech Weekly in partnership with Inc. Magazine, NBCUniversal and Apple News. He believes media publishing has always been a scary place to invest. “The revenue is just not there, nor are the exits.” Brackeen said he and his team at Lightship initially approached NBC and Inc. to be partners for their annual tech conference Black Tech Week.
“Our relationship grew to tell Black founder stories all year long,” he said. That resulted in Black Tech Weekly, a platform that includes The Black Wall Street Times, Rolling Out and Brand & Culture. It adds to the number of readers from its partnership with Inc. and NBCUniversal, allowing them to charge more for advertising. “That means our Black publishers are getting more revenue than they otherwise would,” he said. Just 4% of media is Black owned, and in 2020, Nielsen’s Ad Intel found that just 2% of ad dollars were given to such companies. “Revenue, not venture capital, is most helpful to Black publishers.”
The best funding for Black news startups is simply deal flow, Byng said. “Advertisers need access to these audiences that we have deep connections to,” she said. “It may be more niche, but niche is our superpower.”
Regardless of which avenue is best, everyone agrees that there is room for more. More money. More players. More chances. More change. Byng said 2020 did at least create a shift for Black-owned media: the rise of more members of Black media who are coming together to share insights, strategies and resources.
“The more transparent we are with each other, the more we can advocate for more equitable deal terms and visibility in the ecosystem,” Byng said.
It’s just disappointing that, as of now, the outliers, the rule breakers, the deviants and risk-takers are almost never allowed to be Black. Some of the largest Black-owned publications are indeed doing well, but imagine how much more they could be doing.
Perhaps my sentiments would be different if diverse mastheads also arose with this crop of mega-funded publishing startups, like Semafor and Puck. Until that, too, changes, I’m constantly trying to decipher what could possibly make these new media waves any different from the tsunamis of the last century.
This piece was updated to clarify the name of AfroLA and the type of nonprofit Capital B is.