Silicon Valley may have soured on media—the hot thing in the Bay is b2b software and online marketplaces these days—but the feeling apparently isn’t mutual. Some of the smartest money in the journalism world is ploughing a small fortune into startups—beginning today—and that includes the risk of investing in companies that face long odds at success. The payoff: innovation that the news industry badly needs but is having a tough time doing in-house, according to the folks doing the investing.
Banking on that possible payoff is Matter, a new startup accelerator located in San Francisco that just announced its first round of investments (see the list of companies here). Funded with $2.5 million from the Knight Foundation and Bay Area public radio station KQED, with support from public radio marketplace PRX, Matter is a four-month program in which early stage media-focused companies work together around the clock, trading a percentage of equity for $50,000 in capital, mentorship from seasoned entrepreneurs, and the opportunity to work side-by-side with other promising new ventures and industry leaders.
The program will culminate in a Demo Day June 13 at which Matter’s first class of startups will show off their businesses—some of which are likely to transform radically throughout the course of the program— to angel investors, venture capitalists, industry leaders and the press in the hopes of making it to the next stage of growth.
“This idea of what we’re trying to do is really support media entrepreneurs and the community around them and really instilling the Silicon Valley mindset with the mission of public media,” said Jigar Mehta, Matter’s director of operations, adding that he sees a real hunger for disruption in the ‘media that matters’ landscape.
Although he supports traditional media, Mehta is particularly intrigued by new platforms and devices and new ways people are consuming content. “There’s a whole new wave of reinvention and lots of different business models. I don’t think there’s just one that’s going to win out, but that’s what makes it exciting for entrepreneurs, I think.”
Journalism’s venture capital team
In addition to Mehta, a documentary filmmaker who worked as a reporter and video journalist for the New York Times, Matter is headed by former design instructor and film producer Corey Ford (who built Runway, an incubator for tech entrepreneurs at Innovation Endeavors), along with PRX founding CEO Jake Shapiro.
The trio has enough funding for 2 years of guiding ambitious startups as they borrow from entrepreneurial approaches and apply them to early-stage journalism-related ventures.
“People are still doing lots of experimentation,” Mehta said, pointing out that areas of content creation, crowdfunding and attempts to democratize distribution are ripe for innovation. “It still feels like the keys to getting this stuff out are still being held by traditional media companies,” he said.
Matter’s not the only media-based accelerator, though it appears to be the only one focusing on journalism and media in the public interest. A Knight-backed incubator—not to be confused with an accelerator—just promoted its third class of startups in Philadelphia. Media Camp, funded by Turner/Warner Brothers, is a 12-week accelerator in San Francisco and L.A. that has mostly invested in social media and apps. The BBC and The New York Times, among other news heavyweights, have also explored the startup world.
“Even big media companies want to be close to entrepreneurs who are really solving interesting problems they can’t as an institution because of all the institutional pressures,” Mehta points out.
To gain entry into Matter, entrepreneurs had to submit a pitch deck or executive summary explaining their mission, customer profile, the problem they’re looking to solve, revenue model, and what technological or societal trends made the timing right for the opportunity. Finalists then worked on projects on their own time before interviewing with Matter for the winning slots.
“We’re not expecting to make tons of money”
Investing capital in untested businesses is a risky endeavor, as Silicon Valley knows. Knight Foundation director of innovation John Bracken points out that the failure rate of startups is high—between 30 and 95 percent depending on your definition of failure and who you ask, though accelerators improve the odds of success, he says. Still, he suspects that most of the projects will be unsuccessful.
“If the batting average is really high, then [Matter's] not taking the risk that we’re expecting them to take,” he said. “We’re not expecting necessarily to make tons of money out of an investment like Matter. What we are expecting is to help seed new thinking and help leading edge entrepreneurs who are thinking about where are citizens in our democracy are going to get the news information people need to live their lives and how do we build sustainable businesses that’ll do that.”
Why take the risk? Entrepreneur and startup guru Dan Martell says looking at the numbers that succeed is not the right measure when judging an accelerator such as Matter.
“I think it’s how many companies fail faster or win bigger,” Martell said, pointing out that two years of mediocre success wastes energy and money. An accelerator program speeds up the moment of truth: it allows entrepreneurs to test out ideas and get feedback, meet with potential customers, prototype products, make tweaks and work to build buzz around their project, allowing them to find out earlier and faster if people are interested in buying what they’re selling
It’s also not always about the money, either, whether it’s journalism or venture capital. Martell points out that there are hundreds of ways to make more money that are more sensible than investing in tech startups. “Tech entrepreneurs are never usually motivated by money,” Martell said. “They just want to change the way they see the world work and solve a problem that hopefully they have a passion for.”