HuffPo Raises $15 Million Third Round; $100 Million Valuation?
This story was written by Rafat Ali.
The Huffington Post has raised another $15 million in funding, according to the Times, as it continues on a high growth trajectory, which also means a high cash burn....to be fair, the site's traffic went through the roof and sky during the election season, and it has been investing a lot in expansion.
Our understanding of the third-round funding as of last week was that it hadn't closed yet, and there was a possibility that the round may even end up near $20 million...we're trying to get more on it now. While we haven't confirmed a valuation, our educated guess is that it is in the $100 million ballpark, post money. The election momentum surely helped them achieve the high end of what they were expecting, but does this create unrealistic expectations on the business side? The big question for the site is on two fronts: whether it can sustain the traffic post-election (the Obama administration transition process and drama is probably still helping it) and secondly, is the direct advertising efforts scaling up, in a market which is brutal, especially for general interest sites like HuffPo.
The Times UK story says that the money will in part be used to develop local news sections across the U.S. and into more investigative journalism. I have my doubts on that exact focus, and I would venture to say even HuffPo understands it. It has started a Chicago site, but local is hardest to scale, and with a small direct sales force at HuffPo, even harder. As for investigative journalism, HuffPo's real daily value is in its aggregation and the spin on it, and investigative while admirable, will not bring in the dollars needed.
More as we find out more. By the way, Arianna Huffington is doing a Q&A with Ashton Kutcher at our year-end ContentNext mixer, and even though she will be asking the questions, we will make sure she answers some too.
By Rafat Ali