Why BuzzFeed might be worth $850 million

Queena Kim Aug 11, 2014
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Why BuzzFeed might be worth $850 million

Queena Kim Aug 11, 2014
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BuzzFeed, the website that blessed us with the listicle revolution, just raised $50 million from some very prominent venture capitalistsThat investment values the company at an estimated $850 million. To put this in context, the Washington Post recently sold for $250 million dollars. So, how did that valuation happen?

For one thing, BuzzFeed boasts that 150 million people visit it every month. By contrast, the New York Times gets 53.8 million visitors, according to comScore. But it’s not just the number of visits that’s valuable, it’s who those visitors are. Paul Sweeney, an analyst at Bloomberg Industries, said most of BuzzFeed’s audience is 35-and-under, a demographic that’s catnip to advertisers.

“It’s been harder and harder for advertisers to reach a younger demographic,” Sweeney said. “The younger folks are the ones who are spending more time on the Internet, more time off of traditional media like newspapers, magazines or television.”

A lot of BuzzFeed’s traffic comes from people sharing its stories on social media sites. Sweeney says that’s a risky strategy. BuzzFeed’s audience would be decimated if social media sites excluded its content.

But investors are betting that BuzzFeed will grow beyond listicles, said Ethan Kurzweil, a venture capitalist at Bessemer Venture Partners. He said investors expect BuzzFeed to become a go-to-platform that offers all kinds of content from video to news and who knows what else.

“I assume they’re betting on a modern media tech company,” Kurzweil said. “Sort of a modern People Magazine, ESPN all in one, all in one, all in one property.”

In fact, BuzzFeed is using its newest round of funding to expand into movies, said Rebecca Lieb, an analyst at the Altimeter Group. She says don’t expect BuzzFeed to compete with 20th Century Fox or Paramount by making traditional films.

“I really don’t think that’s going to be the case,” she said. 

Lieb predicts BuzzFeed will redefine movies and create ones that cater to its digital-first audience.

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