5 reasons BuzzFeed deserves its $850m valuation

Venture capitalists Andreeson Horowitz didn't put in $50m just for cat listicles and 90s gifs.

by Rachel Savage
Last Updated: 11 Aug 2014

BuzzFeed, the online media company that started those list articles plastered all over the internet (including this definitely-not-ironic one), has just scored $50m (£29.8m) from Andreeson Horowitz, which has also backed Facebook, Twitter, Pinterest and Skype.

The investment takes its total fundraising to $96.3m since 2008 and values it at $850m, according to the New York Times. It’s not quite as much as the $2bn valuation of Vice, the hipster media company that visited North Korea with US basketball star Dennis Rodman, but still a big vote of confidence. And here, in true BuzzFeed-style, are five reasons why it deserves it.

1.  It's ‘consistently profitable’

Traditional media companies are still struggling to turn a profit in the brave, not-so-new world of online. But it’s not just news and views that are finding it tricky to stay in the black: Twitter has yet to report positive earnings, while Amazon’s are more volatile than the British summer weather (although they would likely argue they’re in the red because of intentional investment). So a media business that’s ‘consistently profitable’, according to Andreeson Horowitz partner (and now BuzzFeed board member too) Chris Dixon, looks like a good bet.

2.  As well as making a whole lot of money

While BuzzFeed is keeping schtum on the exact amount it rakes in in revenues, co-founder and chief executive Jonah Peretti did say they doubled year-on-year in the first half of 2014, while Dixon said it will hit ‘triple digit millions’ this year. At least they’re not keeping everything stored up for a ‘You won’t believe how much money BuzzFeed makes’ article.

3.  The masses love lists

As many advertisers and their clients still struggle to work out how to connect with the yoof, BuzzFeed has it nailed, ‘reaching’ more than 150 million people a month, according to Dixon. That’s despite being pilloried for such deep, meaningful articles as ‘The 100 most important cat pictures of all time’ and ‘What type of shark are you?’. A lot of companies are now jumping on the viral bandwagon too, with the 75-strong BuzzFeed Creative team churning out list and meme-packed content (‘native advertising) for them and generating the majority of the company’s revenues.

4.  But BuzzFeed’s not stopping there

BuzzFeed has already invested in news reporters and so-called ‘long-form’ journalism, including hiring Pullitzer Prize-winner Mark Schoofs to head up its investigations team. Its ambitions haven’t been sated yet either: the latest funding will be used for adding more sections (it already covers areas like politics and tech), setting up an in-house startups incubator, making acquisitions and expanding its nascent, LA-based video arm BuzzFeed Motion Pictures, according to the New York Times. Phew. No wonder it wanted to raise more money.

5.  It gets social media

The lifeblood of BuzzFeed is sharing on social media, which generates 75% of its non-direct traffic. Analysts have warned that’s a sign of dependency. ‘If Facebook decides to tinker with its algorithms tomorrow, these viral publishers could be gone in the blink of an eye,’ said Forrester Research analyst Nate Elliott. So-called ‘social readers’ from newspapers like The Independent used to be all over Facebook like a rash, for example, before users complained and the social network effectively wiped them off timelines.

But BuzzFeed’s aforementioned expansion plans may help solve that potential problem, plus Facebook still wants people sharing as much as possible online. And it already has a team of 20 people creating content just for platforms like Twitter, Instagram and Snapchat. For the moment, at least, Buzzfeed is winning the internet.

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