Bloomberg LP started as a financial terminal business, then it extended into the media world. Now, it’s trying its hand at venture capital.
Bloomberg Beta, the $75 million fund backed by Bloomberg, was launched last June with a mission to spot smart startup ideas and entrepreneurs before they hit the big time. To that end, the VC arm has built a diverse portfolio of companies that include media (newsletter company Redef), customer relationship management software (Prosperworks) and even telecommunications hardware (goTenna).
Its approach is already paying off. One of its early investments, Newsle, became Bloomberg Beta’s first high-profile exit when it was acquired by LinkedIn for an undisclosed amount. Newsle, which works by sending users updates whenever their friends make the news, was a good fit not only for the professional-oriented LinkedIn but also for Bloomberg Beta, which is focused on startups that improve how people work.
“Startups are becoming more relevant to what Bloomberg does much faster than they did in the past,” said Roy Bahat, head of Bloomberg Beta and former president of IGN Entertainment. “A company can go from being unknown to something that everyone uses faster than an established business can develop a partnership with them. It turns out one of the few ways to have a real relationship with a day-zero startup is to invest in it.”
Strategic investment divisions of large media companies are nothing new. Big media companies like Time Warner and Comcast and even agencies like R/GA and WPP have all launched strategic investment arms with the idea that pouring money into small startups gives them first dibs on whatever those startups produce.
But Bloomberg Beta is unique in that, unlike its counterparts, it wasn’t launched as a way to funnel deals into its parent company. Instead, it’s a venture arm founded strictly for financial gain, a trait its management says better aligns its mission with the startups it works alongside. Transparency is also a big part of Bloomberg Beta’s approach. It has both published and open-sourced its operating manual online, for one, letting anyone get an in-depth look at what makes it tick.
Media, as you might expect, has been a big part of its investment mix. Of the 28 companies Bloomberg Beta has invested in so far, five are focused on improving how information is discovered and spread online. Quibb, for example, uses community to help surface relevant news, while newsletter service Redef does so with a top-down curated approach. (One area Bloomberg Beta has not yet made a big investment in is video.)
Helping people find the information that is most useful to them is a difficult, constantly evolving problem, which is why Bloomberg Beta’s strategy is to treat all approaches as if they are equally viable.
“We lack a religion on the right way to solve the problem,” Bahat said. ” For the long term, I see us committed to multiple tracks to figure it out,” he said.
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