Why VCs Need to Think Like a Journalist: An editorial approach to startup funding

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If there is any character trait of which journalists could be rightly accused, it’s of being cynical.

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A reporter would be remiss not to prod a potential news source with enough follow-up questions to make the on-site public relations rep squirm and find out if there is any extra meat beyond the official press release or talking points. Along similar lines, that reporter’s editors would be sleeping on the job if they didn’t poke holes into the stories that come across their desks, casting a lens as to what an article needs to make it sing and for the reader to come away with new knowledge of the subject matter at hand.

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The Mainstays Of Journalism Culture

On this note, given the financial constraints facing newsrooms as of late, the very story topics themselves are subject to tighter scrutiny. Weekly editorial meetings, mainstays of journalism culture, get peppered with many more “no” responses, rather than “sure, let’s explore that” from those higher up on the masthead. The reasons for this — decreased ad revenue; lowered travel budgets, and so on — are largely a different discussion. But while the criteria may be much more stringent than earlier days, what makes story topics pass editorial muster remains largely unchanged:

It is from this same lens of scrutiny that funding boards - corporate or traditional venture capital, private equity, or otherwise - should think about approaching startup funding allocation. While the status quo is often about what company is going to reap the biggest and quickest returns, there is long-term value in providing funding based on criteria that is often more qualitative than quantitative.

Instead of being based on cold data, decisions should be more often than not, based on relevance as determined by humans. In effect, venture capital should make funding decisions as if they were governed by the editorial masthead, rather than the publishing one.

Funding: Long-Term Nourishment, Rather Than A Sugar Fix

Similarly, much like big-picture feature articles can change the conversation both on social media and under non-pandemic situations, become the topic of cocktail party repartee, the right products can steer course in their given sector and effect positive change in the lives of both the company founders and of the product or service’s end-user.

Now take a couple of trends in digital media as of late: click-through slideshows and writing to follow trending media topics. To take a hypothetical situation: Someone on the business side of media saw more ad revenue coming in from slideshows of collated Tweets from disgruntled so-called influencers holding Fyre Fest tickets than from a long-form, researched journalism article.

Such junk-food media is easier to monetize in the short term: Each slide offers another opportunity for ad space, plus the extra clicks mean more page views, which in turn helps with ad revenue. Granted, the media industry needs to do what it needs to survive. At the same time, however, for people to see long-term value in media, reporting information that’s impervious to trends and bias will need to exist.

Collages of the latest Kardashian news or faux-wellness juice cleanses do little to foster and nourish curiosity in the reader. Yet when push comes to shove, budgets for reporting are among the first to fall by the media wayside.

Along similar lines, VC firms often reward what seems familiar and offers reasonably fast returns; e.g. have a readily apparent IPO track; rather than necessarily what people need. As Elizabeth MacBride, a longtime business and financial journalist and founder of startup publication Times of Entrepreneurship, points out for MIT Technology Review, why hasn’t the venture capital community funded pharmaceuticals or PPE necessary to help get our country past the COVID-19 pandemic?

It would seem that at first blush, such companies would offer ready returns. But perhaps they just don’t market as well. Or like a company looking to gain media coverage, they don’t have that public relations foot in the door. The answer is more troubling. Like how publications gravitate toward the most clickable headlines and formats (looking at you, BuzzFeed listicles), Silicon Valley is similarly obsessed with “software companies that grow fast and generate large amounts of money for a shrinking number of Americans,” writes MacBride.

Venture Capital Funding Software Ad-Tech Solution

Because of the circles in which they operate, some professed software ad-tech “solution” is more likely to get that Series A rather than something the general population needs. Or, in the case of the Juicero, something Silicon Valley thought the world needed: a software-powered $400 squeezer of juice packets. VCs quoted by business media called the deal a “complicated business,” given its combination of software and consumer juice.

This line of thinking is understandable, to a point. The dream of many Silicon Valley dwellers is to make hay working in tech, with a mid-career pivot to venture capital should they reach that fork in the road. Just like the best writing is done by people familiar with the topic, software is a leading subject matter of expertise for the firms of Sand Hill Road. The well-hewed software to venture capital pipeline is a big reason that software companies have an advantage in getting facetime with sources of funding. It’s also a major factor as to why many VC boards share demographics with much of the software industry: white males who live for tech, rather than representative of people whose daily needs lie somewhere outside a B2B SaaS product.

Oh, and about that $400 juicer? Leave it to a team of Bloomberg journalists to figure out within minutes that the juice packets could be pressed by hand—and faster than the Juicero—if not without some distressing noises.

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Anne Szustek Talbot is a longtime content specialist, with nearly a decade and a half of experience covering news in and communicating on behalf of firms working in the asset management, litigation, financial technology, and tax sectors; as well as broader topics such as emerging markets, foreign exchange, and macroeconomics. Her most recent journalism position was as the online editor at Institutional Investor, where, among other responsibilities, she helmed the publication’s op-ed section and third-party thought leadership content. On the public relations side, she has earned coverage in an array of top-tier outlets including Cheddar, CNBC, Forbes, and The New York Times. Previous roles have taken Anne across borders and industries; her earliest roles were working for the senator from her home state, handling communications work, and as an intern diplomat for the State Department at the US Embassy in Tashkent, Uzbekistan and at the US Consulate General in Istanbul, Turkey, where she would return to launch her media career. Anne leans on her varied background to reach across industries and develop the most effective messaging and publicity campaigns on behalf of BX3 and its clients. Anne holds a BA in linguistics and Near Eastern Languages and Civilizations from the University of Chicago, from where she also earned her MA in Middle Eastern Studies. A native of the Minneapolis area, she now lives in Brooklyn, where she trains as a distance runner and in a nod to her hometown, has DJed under the handle Cherry Spoon.