BuzzFeed Is Now Valued At ~$200 Million, But Investors Think It Has Billion-Dollar Potential

Business Insider

BuzzFeed, a media company that makes viral content, announced a $19.3 million fundraise this morning.

Last January, it announced a $15.5 million round, and it has raised $46.3 million to date.

Sources familiar with the company say last year's financing valued BuzzFeed between $100 million and $120 million, and the current round was valued at about $200 million.

We've also confirmed AdAge's report that the company still has all of the $15.5 million in the bank, plus some. The new Series D is a growth round, meant to significantly increase BuzzFeed's headcount, and it was raised ahead of schedule.

Since last year, BuzzFeed's traffic has soared from 25 million monthly unique visitors to 40 million. Its 2012 revenue is expected to be $20 million, which is triple what it did a year ago.

Where does the company go from here?

Investors are hoping it sells for a minimum of $300 million. An ideal price would be $600 million or higher.

"This is definitely a potential billion-dollar company, no question," we were told.

An investor tells us BuzzFeed is particularly appealing because of its core team and mobile advertising solutions.

As mobile consumption increases, BuzzFeed is positioned to take a chunk of media ad dollars. It doesn't run any banner ads, only sponsored content, which is more effective on mobile devices. In fact, BuzzFeed's sponsored content is actually more effective on mobile devices than it is on desktops. Its app has big share buttons that make it easy to spread articles to Facebook or Twitter. "It is the most effective way to advertise on mobile," we were told.

Investors are also excited about CEO Jonah Peretti and his business counterpart, Jon Steinberg. "They've proven they're not just the average tech startup," this person said. Peretti has become a world expert in viral content and Steinberg has become a leader in the organization -- one who will undoubtedly go on to run an even bigger company someday.

In addition, the numbers BuzzFeed produces are impressive. BuzzFeed already has more traffic than The Huffington Post did when it sold for $315 million or Bleacher Report when it sold for $200 million.

For a comparison, The Huffington Post (which Peretti co-founded) raised $37 million before it was acquired by AOL. It had fewer unique visitors than BuzzFeed when it was acquired but had more employees (about 200). It also generated more money than BuzzFeed currently does, producing $30 million at the time of its sale.

Bleacher Report, a sports site written by sports fans, was purchased by Turner earlier this year for $200 million. It raised more money than The Huffington Post, $40.5 million, but less than BuzzFeed. It had about 25 million uniques at the time of the sale, 135 employees, and 6,000 contributors. Its revenue was reportedly in the $30-40 million range.

Analysts criticized The Huffington Post acquisition, saying the price was inflated. And while Bleacher Report was a win for founders and investors, it wasn't a home run.

BuzzFeed has more traffic than either of those media properties, but it has more outside capital and less revenue. It needs to have a really big 2013 and triple revenues again to justify the amount of money it's raised. It also needs a big fat exit.

It's possible that BuzzFeed could become worth much more than $500 million. Someone will build the first new age media brand that's worth $1 billion and generates hundreds of millions in revenue. It will likely be a media property who's only focus is to produce content, not an AOL or a Yahoo that has other distractions.

Could BuzzFeed be that company? Maybe, if its revenue continues to triple. It's the bet investors and Peretti are making.

"We have a bunch of big exciting ideas," Peretti tells us. "Some of it is investing in things we're already doing, like mobile. We feel our creative team is just scratching the surface. Also, our LA office is just getting started. We want to keep surprising people. Some of what we'll do, you'll be able to guess and expect. Other things will be pleasant surprises."

We met with Peretti a few weeks back. Here's where he thinks his company is headed.



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