Gimlet Media, the Brooklyn-based podcasting network behind shows like StartUp and Reply All, announced today that it has closed a $15 million round led by Stripes Group. The series B includes existing investors Cross Culture Ventures and Betaworks, along with newcomer, Emerson Collective.
Recode, which reported the story overnight, notes that the funding runs counter to the common wisdom that VCs hate investing in podcasting. Gimlet cofounder and CEO Alex Blumberg believes the hesitancy is a symptom of an ongoing disconnect. “There’s a classic situation of media companies and technology-based VCs being something of a mismatch,” he tells TechCrunch. “Podcasting is just a continuation of that pattern.”
The solution to the problem is, in part, finding the right investors. Stripes Group, notably, is a big investor in Blue Apron, a mainstay in the world of podcast advertising. The Laurene Powell Jobs-led Emerson Collective, meanwhile, made news late last week when it acquired a majority stake in The Atlantic.
While podcasting has traditionally been mystery to advertisers, the young medium's continued growth is clear. IAB (Interactive Advertising Bureau) report a projected 85-increase in ad revenue between 2016 and 2017, bringing the forecasted number up to $220 million. Meanwhile, Edison, the self-proclaimed "leading podcast research company in the world," noted that in 2016, 56 million Americans reported having listened to a podcast in the last month.
Of course, many of the most popular show are outgrowth of existing media properties like NPR and The New York Times. As such, it's been a tough category for startups like Gimlet to crack. Blumberg, a veteran of popular public radio shows This American Life and Planet Money, founded the company in 2014, along with Matthew Lieber, who now serves as Gimlet’s president. The company’s early travails served as the source material for the first season of the podcast, Startup.
“When Matt and I started this company, we didn’t have any platform at all,” says Blumberg. "I started a Twitter account right before I left, because I needed some audience. That was one of the reasons that we launched Startup. Matt and I were going through a process that was new to us of starting a company, and we just kept marveling at how weird and strange and confusing it was. That was the most interesting thing that was happening to us, so we made a podcast about that.”
The show has become one of Gimlet’s most popular, and will serve as the basis for the upcoming ABC network Zach Braff vehicle, Alex, Inc. It turns out that, along with advertising, IP licensing is a pretty good way to generate revenue for your fledgling podcast network. Along wth the Braffening, Gimlet has also optioned Homecoming — the network’s first fictional show is being adapted into a series for Amazon starring Julia Roberts, helmed by Mr. Robot creator Sam Esmail.
And earlier this year, it was announced that Robert Downey Jr. will star in a Richard Linklater film based on an episode of the Gimlet’s popular Reply All program.
The new round of funding will go toward the development of more programs and an expansion of the company’s staff, which currently numbers around 80. The network will also expand Gimlet Creative, which partners with brands to develop native advertising and sponsored podcasts. Gimlet is also looking to further tailor its programming for emerging tech platforms.
“When we started, we saw that there were a couple of big use cases for podcasting,” says Lieber. “The average length of a commute is 20 to 40 minutes, the average length of a workout is 20 to 40 minutes. The average length of most of our shows is 20 to 40 minutes, because they fit into those moments in people’s day. We’re really interested in what kind of formats are possible with Alexa, Google Home and the Apple HomePod, because it allows for an interactive audio experience. We’re actively developing new ideas that fit those use cases as well.”