By Brad Young published February 25, 2015

Venture-capital Backing of Content Companies Matters for Brand Publishers

brad-young-venture-capital-backing-coverAt the risk of sounding blasphemous, I’m not sure if LUMAscape is useful or a waste of time. If you’re not familiar with LUMAscape, it maps the entire sector-based ecosystem of companies in categories like mobile and search, to name just two. While it may make us look smart when we print and post them on the office walls, the abyss of logos and boxes just make me cross-eyed.

The “content marketing/native” LUMAscape is typical in its overwhelming comprehensiveness: Hundreds and hundreds of logos from companies as large, medium, and small dots across 16 categories like content creation, content curation, content, and content planning and amplification. If I look at it long enough I start to feel content intoxication.

But clearly the content marketing/native-sector LUMAscape has value. It has been viewed more than 2.1 million times at And you can bet that venture capital firms represent a large chunk of those clicks as they seek opportunity in what has been a booming market for content investment.

Venture capital firms have dumped more than $300 million into content companies across 50 or so deals in 2013 and 2014. Much of that has been seed-level investment, so apparently VCs feel there is “Luma rooma” for more logos (or more boxes). But there have also been significant later-stage bets on growing content companies such as Percolate, which raised $34.5 million in 2014, NewsCred ($25 million), Contently ($12.3 million), ($8.1 million), Skyword ($11 million), and SimpleReach ($9 million).

Investors take it as a foregone conclusion that content is going to be this massive opportunity,” says Edward Kim, CEO of SimpleReach, which works with brands and publishers on content measurement and distribution. “The question becomes, ‘Which companies need to exist for this opportunity to be fully realized’?

As we brand publishers look ahead this year and beyond, it’s not about whether the market will remain so frothy. (That’s the concern for the investor and investee.) What we want to know is, “Why does it matter to us?” Let’s take a crack at answering that.

Addressing needs

For all the investor enthusiasm for content-related plays now, it is still in the very early days. “There’s a long way to go if you think about new geographies, new targets, new markets, new channels,” Kiva Kolstein, Percolate’s Vice President of Sales and Account Management, said at a panel discussion on VC investments as part of Content Marketing World last year. “On TV, 10% of a project’s budget is spent to create the content and 90% is spent to promote it. It’s flipped on digital. Companies are spending more money creating content than promoting it. If there’s an investment thesis to be had there, it’s that this is a market that you want to be part of.”

Omar El-Ayat, Vice President at Crosslink Capital and an investor in, Scripted, and other content marketing service providers, points to the fact that content investments are still a fraction of what has gone into email marketing, social media marketing, and marketing automation. And he notes that heavyweight software providers like SAP and Oracle are only beginning to activate in the space. (Many believe the market will consolidate around these companies’ efforts to offer an integrated, end-to-end marketing stack.)

If we are indeed only at the beginning, content chiefs can delight in the fact that investments will gravitate to the areas where we still need the most help. For brands, this is the primary upside of the VC interest in content. As Kolstein points out, VC dollars can help us more effectively unlock new channels – specifically mobile – and new global markets. Companies with the best solutions for these needs will have strong pitch decks for their VC meetings – and their sales calls with us. That’s a win-win-win.

The other major opportunity is in analytics. Figuring out the metrics that matter most – in collaboration with brands – remains an enormous focus for companies of all sizes and stages. For instance, it’s what drew MK Capital to be the lead investor on SimpleReach’s July Series A. “The key to unlocking this native-advertising market will be that analytics bridge that connects deep engagement with compelling brand-sponsored content with conversion into new customers,” says Kirk Wolfe, a partner at MK.

Managing costs

Apparently, I’m not the only one a bit overwhelmed by the content LUMAscape. The explosion in the market has “made it very difficult for CMOs to understand who does what,” Shafqat Islam, Co-Founder and CEO of NewsCred, said at Content Marketing World. “They’re thoroughly confused. We need to help the marketers understand the landscape in a way that is totally unbiased and helpful.”

The upside of the fast-rising number of companies, though, is the pressure competition creates. In NewsCred’s content marketing software space alone, you have NewsCred, Percolate, Kapost, Contently, Oracle, and others fighting fiercely for brand dollars. It puts negotiating power almost completely in the hands of the brands. When a competitive set isn’t as obvious, Islam advises we ask vendors to put themselves in a LUMAscape box: “Who else does anything similar to what you do?” Demand that they offer an answer. (i.e., Don’t settle for “nobody.”)

Sparking innovation

Kim, SimpleReach CEO, says he isn’t building a company for today’s market needs. He is getting ready for tomorrow, as the conversation on content distribution has only recently begun to heat up. And NewsCred has deployed its investment funds to beef up R&D. Islam is quick to point to its 70-plus engineers on staff.

Islam sees this as the primary reason why brand publishers should care about companies like his raking in the dough. Don’t we all want to know we are working with viable, dynamic partners? And aren’t these dedicated players the best ones to address opportunities such as content curation and personalization?

“Marketing is evolving so, so quickly,” Islam says. “You want to make sure you have a partner who can innovate as fast as this market is changing.” Maybe they can read the LUMAscape for you, too.

This article originally appeared in the February 2015 issue of Chief Content Officer. Sign up to receive your free subscription to our bi-monthly magazine.

Image courtesy of CCO magazine

Author: Brad Young

Brad is the Global Content Strategy Leader at Dun & Bradstreet. Follow D&B at @DnBUS and follow Brad at @byoung07016.

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  • Rob TheGenie Toth

    We spend $4 – $5 for promotion for every $1 of branded entertainment web-based production (ie: 80% ad spend, 20% production costs).

    I agree with SimpleReach’s CEO stating that he’s building for “tomorrow” not today. Look at where the market will be 5+ years from now. Serve the market now but always head to where it will be.

    • Brad Young

      Thanks so much for the comment, Rob. I have to say that Eddie Kim is wicked smart on this market. A smart guy to agree with! :) How is that allocation of production to promotion working for you?

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