Earlier this week, New York tech-business blog Silicon Alley Insider said it raised a $1 million round that valued the company at $7 million, post-money. Bloggers love hearing valuation numbers like this, because we can use them to guess the value of other blogs. So let’s play the connect-the-dots game of blog valuations.
ContentNext media-business and conference outfit (featuring flagship property PaidContent), which sold to England-based Guardian Media Group, was reportedly worth “north of $30 million.” But that number included earn-out options that certainly mean the company is worth at least slightly less than “north of $30 million” until those earn-outs are achieved.
But, hey, $30 million is a new number to work with now, so it can also be used to analyze the value of SAI. Which is what Ashkan Karbasfrooshan (who blogs at Hipmojo and has his own video-focused online media business), did. He estimates that SAI should have a post-money valuation of $6 million, even though SAI’s chairman, Kevin Ryan, told The Deal it was worth a million more than that. PaidContent, incidentally, also reported that SAI was worth $6 million. Another, previous third-party pegged its valuation at slightly less than $6 million.
(SAI’s investors include Dave Morgan, founder and CEO of Tacodo, Allen Morgan, who recently left the Mayfield Fund, L. Gordon Crovitz, Ken Lerer, co-founder of HuffingtonPost.com, Roger Ehrenberg and James Kohlberg.)
ContentNext has four properties with high-end media readers, unclear total traffic numbers, and a profitable conference-hosting business and research services; SAI has one property, but claims 1 million monthly visitors — and it is planning to create more sites and organize conferences.
Time for another data dot: The recent sale of Ars Technica, a technology analysis blog, to Conde Nast for $25M; the sale included two smaller properties, so many blogs including SAI estimated that the Ars site is worth closer to $15 million on its own. Ars gets 1.5 million visitors a month, according to comScore, but may get more like 4.5 million, according to a TechCrunch report on the sale. If the latter number is true, then how can SAI be worth nearly half as much as Ars, with 1 million visitors versus 4.5 million?
Well, Ars is certainly popular on big news aggregation sites like Digg, but Silicon Alley Insider has nailed a nice chunk of the wealthy technology finance audience and shows up on other aggregators like Techmeme far more often (and unlike Ars, it doesn’t get accused of ripping off others’ stories). Maybe SAI’s readership and brand is worth enough to explain the valuation-to-traffic discrepancy.
But as Karbasfrooshan points out, online media valuations are a fuzzy medley not just of comparable prices, but of market demand, fundamentals (ad revenue, conference revenue, etc.) and “leverage,” which he calls “a combination of the three points above.” His further explanation: “Why it’s a point in itself is because some people might have 1, 2, and 3 but cannot exert that leverage or are poor negotiators (or as they say in Latin, smallus ballus).”
I’d like to see a leverage-to-value ratio comparison between tech blogs, but since VentureBeat is itself part of this story, I’ll leave that alone.
Since blogs reporting numbers about other blogs helps to determine things like sale prices, and because those prices vary, here’s what seems to be happening: Blogs want to look bigger and more important than each other, so on that front it’s in each blog’s interests to tear each competitor down a little when writing about valuations and sales. Meanwhile, every additional high blog valuation leads to potentially higher valuations of rival blogs.
What we have here is a tragedy of the commons situation, where every blog’s valuation can be hurt simply by their rival’s reporting — or where every blog’s valuation can go up, also based on reported information about them. So, oh noble blogging competitors, let’s grow this forest of blog valuations and agree that VentureBeat is worth north of $100 million.
[Photo via the University of Minnesota, Duluth.]