Whew! The New Media Ventures Innovation Fund Open Call has just closed and received 150 applications. For this Open Call, we seek to make investments and grants in progressive, scalable media startups that could make the world a better place. We’re currently in the process of evaluating all these applications (we have our work cut out for us!), but we’ve learned a few things already.
Media vs. Tech
During the last Open Call we received mostly tech applications and invested in 6 software companies. We decided to focus explicitly on media this time around and were happy to see that about half our applications were media based. We are, after all, New Media Ventures! Content creation, distribution and promotion are powerful tools for organizers and we want to continue catalyzing innovation in that area, building on the investments we made in Upworthy, DailyKos and others.
Nonprofit vs. For-Profit
About ⅔ or our applications were from for-profit startups, while ⅓ were from nonprofits. This was surprising, since our last Open Call in November 2014 was focused on for-profits only. We had expected that opening up this round to nonprofits would reveal pent up demand for nonprofit funding but that wasn’t the case. The results could reflect a number of factors— maybe the prevalence of for-profits in the last round created a misperception about the type of startups NMV funds. It’s also possible that the media focus of this Open Call lends itself to more for-profit applicants.
Wide Variety of Subject-Matter
One of the more interesting things to emerge from this year’s Open Call is the sheer diversity of issues that the startups focus on. They encompassed everything from immigration reform to environmental justice to housing policy. One particularly noticeable trend was the number of media startups focused on communities of color. We loved seeing such a diversity of ideas in our applicant pool!
Do They Fit?
Of course, little of this would matter if the applications didn’t meet our criteria. Thankfully, a majority of applicants met our target criteria. They were largely early stage (we are not opposed to investing in later stage companies, but our target for the Innovation Fund is early stage). They were almost entirely either media or tech, with some intriguing media/tech combinations. One open question for us, during this diligence period, will be to determine how far along the progressive spectrum an organization needs to be to quality for our portfolio. While many startups have compelling missions, we specifically seek out the ones that will provide individuals and communities more power to organize and have a voice in our democracy.
Room for Improvement In the Applications
While we received a lot of great applications, there was still room for improvement. Surprisingly, it often took a while to figure out exactly what a startup does. There are a lot of inspiring problems being solved and compelling visions, but entrepreneurs often failed to articulate succinctly what they do. More importantly, we would like to see more robust thinking around revenue models. Even for nonprofits, financial sustainability is critical to achieve long-term impact. It’s fairly common to see early-stage organizations struggle with detailing their revenue model, and we understand that projections at this early stage are highly speculative. That said, we do look for rigorous thinking, clear assumptions and specific evidence wherever possible. “We’ll have an ad-based revenue model” is not enough!
What We Could Have Done Better
While we are very happy with how this round went, there are definitely things we could do better. Finding the right application length was a real challenge—we wanted to ask enough questions to be able to accurately assess companies, but not so many as to be onerous. We haven’t hit the sweet spot yet and will be sending out a survey to everyone who applied to hear what we could have done better. Additionally, we are considering asking for a product demo explicitly next time – it can sometimes take serious digging on a website to find a demo. Finally, we did extensive outreach in our community to solicit applications, but we could have done a much better job of reaching out to new communities.
We’re working with our Screening Committee to assess and evaluate our applicants. After a lot of work, a pile of paperwork and a little magic, we’ll be ready to announce our investment decision in September.