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Online company BuzzFeed secures $50 million
New York • BuzzFeed Inc., the online home of quizzes, lists and (increasingly) serious news, got a $50 million investment reported to value the company at $850 million — or about half the New York Times Co.'s market capitalization.
The funding came from venture-capital firm Andreessen Horowitz, whose partner Chris Dixon will join the BuzzFeed board, according to a blog post. The Times reported the valuation, citing a person familiar with the matter. Ashley McCollum, a BuzzFeed spokeswoman, said she couldn't confirm the figure.
BuzzFeed, founded in 2006 by Huffington Post co-Founder Jonah Peretti, has emerged as a viral website that averages 150 million visitors a month. By contrast, the Times gets 31 million unique visitors a month to its website, with a circulation of 2.5 million Sunday readers across print and digital. The Washington Post, acquired this year by billionaire Jeff Bezos for $250 million, averages 18.8 million visitors a month.
"The investment from Andreessen Horowitz really validates BuzzFeed, as a company and as an entity. It's one of the most highly regarded investors in the Valley," said Paul Sweeney, an analyst at Bloomberg Intelligence. "BuzzFeed has really proven itself to be a real business. It's moved from being a concept to a real business model."
BuzzFeed's coverage includes everything from weighty political journalism and long-form stories that rival traditional publications to autocorrect mishaps and quirky photo lists, such as "10 Pieces Of Proof That Shar-Peis Are Actually Fuzzy Land Manatees."
The investment values BuzzFeed at about seven times its annual revenue, in line with other Internet startups, Sweeney said.
Andreessen Horowitz joins the rank of a number of BuzzFeed investors, including Hearst Corp., SoftBank Corp., and most recently, an investor group led by venture firm New Enterprise Associates, which invested $19.3 million in January 2013. Andreessen Horowitz's funding brings BuzzFeed's total money raised to almost $100 million, up from $46 million last year.
The funding will let BuzzFeed expand to Mumbai, Mexico City, Berlin and Tokyo and to convert its video division into BuzzFeed Motion Pictures, which will focus on everything from animated online images to feature-length films, the company said Monday.
BuzzFeed relies on Facebook and other social networks to spread its articles and videos. At the end of last year, the company was forecasting revenue of as much as $120 million in 2014, people familiar with the matter said at the time. The startup, which has more than 500 employees, is profitable, Peretti said in September 2013.
"We're presently in the midst of a major technological shift in which, increasingly, news and entertainment are being distributed on social networks and consumed on mobile devices," Dixon said in his blog post. "We believe BuzzFeed will emerge from this period as a preeminent media company."
The site's traffic has lured big-name advertisers like General Electric and Toyota. Unlike traditional news sources, which have relied on banner ads, BuzzFeed established itself by making sponsored versions of its articles for advertisers, such as animated images that promoted Google+ Photos or a feature on winter attractions in New York that plugged the state lottery's scratch-off games.
That model has caught on with other news organizations, including the Times, though critics such as HBO's John Oliver have said the practice blurs the lines between news and advertising.
Bloomberg LP, the parent of Bloomberg News, is an investor in Andreessen Horowitz.