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8 reasons why bloggers are attractive investment bets
A recent article published by Ad Age, revealed that bloggers are increasingly succeeding in attracting funding for new ventures. Why is that?
Geri Hirsch went from authoring her fashion-lifestyle blog, Because I’m Addicted, to co-founding Leaf, a series of how-to concept videos covering things like living, eating and fashion.
Following a very successful commissioned video, StyleHaul, the largest fashion and beauty community on YouTube, became Leaf’s primary backer. Hirsch and Leaf co-founder Erin Falconer went on to produce video content for Gap and Ann Taylor, as well as editorial content for Redbook and Foam magazines. The duo is now are experimenting with shoppable videos — viewers can click on links in the video to purchase the fashion items being modeled — and introducing product lines.
Fashion blog, Business of Fashion, received a more traditional form of funding when Index Ventures, the VC firm that made early investments in tech companies such as Skype, Dropbox and Lovefilm, invested US$2.1-million. Index Ventures has also made a US$40 million investment in fashion blog and shop Nasty Gal.
Michelle Phan, the wildly popular YouTube beauty and fashion vlogger, used her social influence to convince investors to back her startup Ipsy, a monthly beauty box subscription service. Crosscut Ventures and Amalfi Capital poured US$3.8 million into her venture, reports Ad Age.
So, how exactly is this all happening?
Social influence
Probably the biggest reason why investors find bloggers appealing is their social reach. Phan and Imran Amed, the founder of Business of Fashion have amassed huge followings. Phan’s channel has nearly 4 million subscribers and Amed reportedly reaches one million readers via his site, social media and an email newsletter, which has 30 000 daily subscribers.
These audiences are extremely attractive to investors, especially those in the early-stage game. Instead of having to use intuition, or gamble on the possibility of traction, they immediately have an audience that they can monetise.
Social is built into the transaction. Not only are bloggers savvy, but they are already plugged into all the social channels, a marketers dream.
Propensity towards niches
Who knows what the next big thing will be, but rest assured, somewhere out there is a blogger pouring their heart and soul into writing about something they are truly passionate about — revenue be damned.
The kicker is, whenever obscure hits the mainstream, the lowly blogger suddenly becomes a thought leader in the field. Suddenly the blog becomes a publishing business catering to a niche audience — an attractive investment.
Investors often talk about how they back people. Who better to back than someone who knows a subject inside and out.
Selling without the schtick
Readers that flock to successful blogs, often do so because they appreciate the blogger’s voice or opinion. The nature of blogs or social platforms such as YouTube encourage interaction, which leads to communities. If a vlogger like Michelle Phan launches a new commercial project or promote a perfume, the community rallies, not in the name of commerce, but in support.
It’s selling without the schtick. There’s no direct sales pitch.
Bloggers, having the personalities or abilities to attract crowds, can also use the very same qualities to sell their ideas to investors.
Entrepreneurial
Successful bloggers are a lot like successful entrepreneurs. They have an independent spirit, a strong personal vision and a desire to create.
Their opinions and ideas are often unique and attract attention.
They are self-starters, competitive and disciplined — bloggers usually have day jobs and still find time to write a witty post.
It’s rare to meet a blogger who doesn’t want to blog full-time. Just like an entrepreneur, a blogger is determined to do whatever it takes to pursue their passion. If you’re an investor, these are all qualities you value.
Digital savviness
Blogging inherently requires an understanding of how the online world works. From its social, revenue and marketing aspects, to its technical and cultural qualities.
Bloggers are all-rounders.
Creativity
Bloggers are creative people. Having to constantly conjure up new topics to talk about is a talent. The same type of talent is valuable in creating new product lines or services.
Frugality
Bootstrapping. Shoestring budgets. Ramen Profitability. Lean startups. Bloggers know how to dream big on small budgets.
Whether it’s using a hand-me down laptop, siphoning free Wi-Fi at the corner coffee shop or finding a dirt cheap hosting provider to install WordPress, bloggers know how to stretch a dollar.
Public awareness
Finally, every time a blogger posts a new article, they are schooled in public relations. What to say, what not to say. What works and what doesn’t. There’s a type of social and cultural awareness that comes from living online, that is hard to instill or teach.
