Starting an online media company is like leaping off a cliff with a parachute you've constructed yourself - terrifying and exhilarating in equal proportions. You have this great concept that could potentially revolutionize the way content is consumed, but there's the problem: you need money to make it happen. Lots of money.
If you're like most digital media startups, you've probably spent many a late night pondering how to bridge the distance between your concept and the bank account needed to turn it into a reality. The good news? Funding isn't as elusive as it seems once you understand what investors are really looking for and how to present your startup in the most flattering light.
Understanding the Digital Media Funding Landscape
The digital media universe has come a long way since the last decade, and so has the landscape of funding there. Older school media investors who previously solely invested in TV networks and print newspapers now actively look for new-age digital content producers, streaming services, and interactive media firms.
But startups in digital media face unique challenges that are distinct from traditional tech company. Your business models might be more volatile, your production costs of content can be high, and finding market fit might necessarily require investing large amounts of up-front capital in content creation. It all requires you to finance strategically and with a keen understanding of what makes digital media investments interesting.
Investors in this space tend to belong in a couple of groups: established media conglomerates looking for diversification, content and media-oriented venture capital companies, angel investors with industry background, and, more and more, private equity players on the hunt for high-performing digital media targets.
Start with defining your target audience and understanding their use behaviors with content in detail. Fuzzy metrics like "everybody will love this" will fail to impress savvy money. They must observe thorough market studies, user profiles, and evidence that you simply understand who you're catering to and why they will pay for your content or use your platform.
Crafting Your Funding Strategy
Different funding sources are suitable at different stages of your startup's development. Understanding these steps guarantees that you attract the right investors at the right time, maximizing your success and reducing effort spent on the wrong sources of funding.
Family and friends investing can provide the critical seed capital when you are still developing your idea. They are more interested in supporting you as an individual than nitpicking every element of your business model, but don't have faith in that special treatment - approach these investments in the same professional manner as any investor.
Angel investors often are the next logical step, most likely experienced individuals in digital media or the entertainment business. They not only can provide cash but also sound counsel and industry connections which are invaluable when you're building your business.
Venture capital is used after you have demonstrated some preliminary traction in the market and need large amounts of money to expand. VC firms invest higher but seek higher growth opportunities and final exit through sale or IPO. Preparing Your Pitch Materials
Your pitch deck needs to tell an exciting story that is both creative vision and hard business reality. Investors in digital media listen to hundreds of pitches, so yours needs to stand out while covering all the bases they need to hit.
Start with a brief statement of the problem identifying the gap in the media landscape today that your company addresses. Then, explain your solution and how it excels from other solutions that have already been developed. Visual depictions of your content or website can be highly engaging here - show, not tell.
What Investors Really Want to See
In these advanced media, investors beyond the typical pitch pillars pay attention to a set of very important factors that determine success or failure in funding.
Knowing these imperatives will help you better position your startup.
Content differentiation is in first priority among investors. The online media environment is highly competitive, and investors must be aware of what is uniquely valuable about your content or platform. This may be innovative storytelling techniques, previously unengaged niche audiences, or novel ways of delivering content.
Scalability is particularly crucial in online media, where the production cost of content can limit growth potential. Investors want to understand how you will efficiently produce quality content in quantity and whether your business model will accommodate sustainable growth without incurring concomitant increased costs.
Making Your Funding Dreams Reality
Getting financing for your digital media startup is a matter of patience, perseverance, and planning. Overnight success is a rare occurrence, but a good strategy, realistic expectations, and strong enthusiasm for your idea can lead to securing investors who share your enthusiasm for re-shaping the digital media landscape.
Remember, money is just the beginning of your journey, not the end. Choose investors who bring more than capital to the table - seek out partners who understand your industry, share your vision, and can help navigate you through the obstacles you will encounter.
Virtual reality tech by VPL Research demonstrated in San Francisco, 1989. pic.twitter.com/v30tJAbQsj
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