Who says that money and humor can't mix? Sources inform that the owner of a collection of funny websites and blogs is now $30 million richer. Seattle-based Cheezburger Network, publisher of popular internet destinations such as Fail Blog, I Can Has Cheezburger and The Daily What, adds to its original $2.25 angel monies by partnering with venture capital funds such as the Foundry Group, Madrona Venture Group, Avalon Ventures and Softbank Capital. According to Xconomy.com, collective traffic is large with 16.5 million unique visitors each month, viewing a total of 375 million pages and adding or sharing 500,000 photos and videos.
According to its website, the Foundry Group that led this deal has some demonstrated winners in its portfolio, including the mammoth game maker Zynga and StockTwits.com, a popular social network for trading strategies. Softbank Capital invested in the Huffington Post and, until it was sold to NewsCorp, the religion powerhouse website known as Beliefnet, Inc. Madrona lists Amazon.com as a prior investment. Avalon has a stake in the aforementioned Zynga which boasts "10 percent of the world's internet population (approximately 215 million monthly users)" as having played one of their games.
Another fun-oriented firm that has raised venture capital money is JibJab.com. In early 2009, it was reported that this popular creator of satirical videos took in $7.5 million in a Series C round from Sony Pictures Entertainment, Overbrook Entertainment and Polaris Venture Partners.
As pension funds add to their venture capital allocations, imagine the due diligence conversations that focus on monetizing funny cat and dog photos or growing virtual crops.
Of course venture capital investing as limited partners means that pensions, endowments and foundations must have a comfort level with how the general partners manage risks and value their portfolio companies. For ERISA plans, an expanded definition of fiduciary, if approved, could materially change the relationship between institutions and fund managers for this alternative investment class. For government plans with a stated goal of revving up the local economy, achieving full diversification may be a challenge.
Editor's Note: Links to related items are shown below.
- "State pension board commits $80 million to venture capital" by Kathleen Gallagher (Journal Sentinel, January 7, 2011)
- "Denmark urges pension funds to join venture capital pool" by Chris Panteli, Global Pensions, August 6, 2010
- "Dutch and Canadian giants launch VC venture" by Mark Cobley, Financial News, June 23, 2010
- "Are Limited Partners Getting the Upper Hand?" by Pascal Levensohn as told to Susan Mangiero, March 18, 2010
- "How Important Are Exit Events to Venture Capital and Private Equity Limited Partners" by Susan Mangiero, May 3, 2009