Patrick Kerins

Why BuzzFeed raised new venture capital

January 3, 2013: 12:56 PM ET

CaptureBuzzFeed investor explains his interest in the social publisher. 

FORTUNE -- Social publisher BuzzFeed today announced that it had raised nearly $19.3 million in new venture capital funding, led by existing investor New Enterprise Associates.

So we took a few minutes to chat about BuzzFeed with NEA partner Patrick Kerins, who sits on the company's board of directors. What follows is an edited transcript:

FORTUNE: You led a $15.5 million financing just last year for BuzzFeed, and the NY Times reports that the money "essentially hasn't been touched yet." So why pump in more cash now?

KERINS: It's not true to say the money hasn't been touched. It's a slight misinterpretation that someone might have made after hearing that BuzzFeed didn't 'need' new money. This round was a situation in which the company had interest in raising new money as a cushion to be aggressive in a few areas. And insiders like us said, 'Don't go to market, just do it with us.'

If the company ramps the way we think it will over the next year, we could take advantage of its position to be a lot more aggressive in mobile. There also are some ideas about international development, but that comes after mobile. There also are some new developments in video, and the company has added some people in that space.

When you look at BuzzFeed's 2012 revenue and traffic growth, how do you separate out results that derived from the presidential election?

It's clear that the political section has been an important part of the company's story and pageviews. But if you broke down revenue by section you wouldn't feel it was particularly concentrated on political revenue. In the social advertising space, the advertisers sort of know where they want to be, and it's actually unusual for it to be [limited to] the political pages.

Ben Smith's stories and scoops have created a lot of buzz and traffic, but the revenues are diversified throughout the site. So I'm not particularly concerned about post-election revenue drop-off. Advertisers have decided that BuzzFeed is a place they want to be, and that remains true.

You mentioned Ben Smith, who BuzzFeed hired in late 2011 from Politico. Should Buzzfeed continue adding high-profile journalists?

You're talking to a director, and this is the sort of thing we leave to the guys who run the company. So my opinion is my opinion, and nothing more. I think that, at different stages of the company's development, having certain notable names is more important than it is at other stages. We want to be a very well-run journalistic entity, but I wouldn't expect us to be looking for Ben Smith-type hires every six to eight months. Our objective is to constantly find the stories and pieces that result in tons of sharing. If a big name makes sense at a given time, then we'll try to get them. But up-and-comers also have proven able to find those stories.

What has been BuzzFeed's influence on the broader digital media market?

I think the social advertising/story unit thing. I think BuzzFeed has proven that you can build a meaningful venture-sized business by using that model. It's turned heads, including at big companies in the Valley. BuzzFeed has eschewed the normal display stuff, and its success has resulted in a lot more of that type of format being tried by other online publishers. And one of the things we wanted to make sure of was that we raised enough capital to keep Buzzfeed on the cutting edge.

What is the future of BuzzFeed? Does it get subsumed by another online media company, like what happened with HuffingtonPost and AOL?

I wouldn't rule out the possibility that it could become a standalone media company. I think our business at New Enterprise Associates is to put real capital behind companies that we think can do that.

It's certainly true that there aren't a lot of VC firms doing content deals, but we've been pretty involved. Not just BuzzFeed, but also Buzz Media, Brian Bedol's new video content production company Bedrocket and a non-fiction film distribution company called SnagFilms.

Media is generally a slow-moving industry with ad money taking a lot of time to find new things. It's not like creating a new storage widget that's 10 times more effective than the last one, so everyone buys it and rips out the old one.

But we've seen enough change in global content consumption and technology usage habits to feel like there are real venture-type opportunities in content. None of us know how it will all play out for sure, but if you can find a great team on the edge of something new in content we're willing to do it. And that's what we think we have in BuzzFeed.

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