What is an investor in early-stage news media looking for? At Media Factory, we’ve been interviewing teams of journalists from across Latin America in search of the holy grail: a group with a strong vision of journalism and business that is already pursuing its own project. It's tough to find.
The role of the managing partner of a media business is turning journalism ambition into an investment opportunity. It’s a matter of translating worlds that, at least in Latin America, are quite separate. Where journalists see stories, investors observe trends and numbers.
What is an investor looking for? What does a journalist or team of journalists need in order to generate interest from venture capital? Just as they need a certain required level of editorial experience, entrepreneurship skills can also be crucial when it comes time for an investor to decide whether to invest. Here are some key aspects of a business that an investor will examine:
Team: The stronger the team, and the more experience it has, the more opportunities there will be to generate interest from investors. However, if a team has been working together for some time without gaining any traction, it should have very strong arguments as to why success would be possible now.
Networking: Have a professional network that allows teams to grow quickly and is reliable when it comes to starting a conversation. Making a list of contacts to pitch should be possible in proportion to past experiences.
Decision: In a risky investment, no funder will want to commit capital to a part-time job. If the venture seems like a hobby, it will be difficult to convince a fund that there is good investment capital.
Numbers: If presenting teams don’t know their market, their earning potential or the potential value of the company they intend to make, investors will have doubts.
More numbers: How many people are connected to the Internet? How many people have cell phones? How far do you have to go in site traffic in order to sit down with big brands and media agencies?
How will you earn money? If you intend to receive a risky investment, it’s likely that those ventures that propose nonprofit models will be automatically discarded.
Business plan: The media are slow to grow, so if a media venture is to receive an investment, the investor wants it to last as long as possible with the least amount of expenses and the greatest traction to start generating profits.
Think of something new: To propose what already exists in a market that already exists or is saturated will surely be difficult to sustain. Proposals must have – or have had – something distinctive.
- Analyze: What is the cost of each article in relation to general business expenses? What is the total mass of potential readers that you can get in a country? What is the percentage of shared articles you can have and what are the best techniques to achieve this in the shortest time possible?
Did you get all that?
ICFJ Knight International Journalism Fellow Mariano Blejman is creating the first news innovation contest in Latin America.
This post was translated from Spanish to English by Jessica Weiss.
Image courtesy of Flickr user SalFalko under a Creative Commons license.