There are at least three things that make an early-stage media venture successful, according to Ben Wirz, Knight Foundation’s director of business consulting.
First and foremost, it has to tackle a real problem, he says. But beyond that “it has to have a team that cares about that problem and has the persistence and determination to go through several different ways of solving it.”
As part of his role managing Knight’s Enterprise Fund - which provides venture funding for media innovation projects - Wirz identifies startups that are aligned with the foundation’s mission. He also consults with grantees on business development and strategy.
We recently talked with him about what he’s learned managing the fund, such as some common stumbling blocks for startups. He even shares what it’s like to be a triplet.
How do you identify projects for Knight’s Enterprise Fund?
B.W: In the beginning, we were just searching for investments we thought were good matches manually. We started attending Y Combinator and TechStars Demo Days; we read TechCrunch and Gigaom, and we continue to invest in companies we find ourselves. But part of the validation for the fund to date is that at least 80 percent of deals we do now are referred to us through Knight’s network, who view it as a natural extension of what we do, particularly with initiatives like the Knight News Challenge, which is open to both nonprofits and for-profits. There’s been a lot less direct outreach; most startups are referred by someone on our staff, board, existing grantees or the greater Knight network because they think they’d be a good fit. That said, Matt Singer, CEO of Videolicious, a mobile video editing company we invested in this year, just sent me an email out of the blue, so folks should feel free to do that as well.
What are some examples of Knight-funded projects that you consider successful?
B.W.: Well impact is certainly easier to see in consumer-facing companies like Upworthy and PolicyMic which reach millions of people each month and are upending the way news content gets created and distributed. But most of the companies we fund are not direct sources of news. A quarter are companies like OwnLocal, Umbel and TapAd which collectively drive tens of millions of dollars of new revenue to existing news publishers by improving the advertising services they can provide. The bulk, roughly 40 percent, are new publishing tools. Some like Submittable and Chute facilitate submission of content, capitalizing on a publisher’s need to get their audience involved. Others like Atavist and Zeega enable individuals, professionals and amateurs alike, to tell better multimedia stories. The balance aren’t publishing tools so much as tools that reimagine the way that people get access to information they need. Captricity makes it easy to upload data trapped on paper (like PDFs or faxes, etc.) and ensure that it can be searched, stored and shared. PublicStuff has changed the way citizens give feedback to their local government. The companies we fund offer diverse solutions and products, so we aren’t looking for a single formula.
You consult with Knight grantees (both nonprofit and for-profit) on business strategy. What are common stumbling blocks?
B.W.: In terms of sustainability - that’s foundation speak for making money - the common lesson for nonprofits is that it’s not something that happens at the end of your grant. You’re either thinking about it before you get funding or you’re in trouble by the time the project is over. In terms of growth for both for-profits and nonprofits, they need to be very careful before scaling a business. Organizations tend to scale successfully only when they really understand why what they have in place is working, otherwise expansion can be deadly. That’s particularly true before they consider expanding to different geographies. Replicating a model presents challenges that are almost always greater than you anticipate.
Why should foundations invest in for-profit companies?
B.W.: As a foundation we believe that democracy thrives when people and communities are informed and engaged. If we want to provide information as a public good, it doesn’t make sense to limit funding only to nonprofits when for-profits are just as capable of advancing that mission. The foundation has its roots in a for-profit company that did just that. Rather than investing strictly to generate returns, now we’re able to look for both financial returns as well as an advancement of our mission.
I’m a startup trying to decide whether to be for-profit or nonprofit. What’s your advice?
B.W.: That’s actually one of the most common questions people ask me, so I put together a SlideShare that walks people through the decision process.
You’re in London for 10 months. Why? Do you hope to gain knowledge there that may help your when you come back Knight?
B.W.: Yes. I’ve been here since September because my wife is pursuing a master’s in art history at The Courtauld Institute of Art. That means I’ll come back much more cultured in art history! While I’m here, I’m plugging into the local media and tech scene, meeting with people at the BBC, SkyNews and The Guardian as well as local startups. I’m also exploring some of the city’s co-working spaces. Europe has a healthy newspaper culture, in the sense that people read more per capita, so it’s a great opportunity for me to think about media generally and understand the kinds of innovations being driven here.
What is it like to be a triplet?
B.W.: I don’t know what it’s like not to be a triplet. I highly recommend it from a user’s perspective! Growing up it was really fun: You have a permanent posse and you’re definitely never bored. Though now that I have a son, I can see how much more demanding it must be as a parent.
By Elizabeth R. Miller, communications associate at Knight Foundation