Like all industries, the entertainment and media industry evolve: content becomes digital first, readers go less for sensationalized and more for high-quality stories, outdated monetization strategies including intrusive ads and sponsored posts die off and new ones emerge. Nowadays, content helps companies build their brand and share job vacancies. It helps writers build up their CVs and exchange professional ideas. Some media outlets monetize via subscriptions, while others rely on independent contributors and their community, and less on full-time journalists.
Over time, media companies move from a licensed business model to direct distribution model, competing in a completely new digital space. The whole publishing industry is shifting away from a small community of exclusive journalists towards a more decentralized web of writers.
That's why our team at Genesis Investments VC is delighted to announce our partnership with Hacker Noon, an American publishing company. Our VC-fund based in Kyiv, Ukraine, joined the $1M Seed Round led by Coil, the web monetization solution provider, with a $150 000 investment amount, after a $350 000 Greater Colorado Venture Fund investment in Hacker Noon. So far, it is the first American startup in the Genesis Investments’ portfolio. But our investment in Hacker Noon goes way beyond international expansion interest, as we see some fundamental reasons to invest in this new-generation tech media:
We believed in the founders’ ability to build a successful business
In investment deals, people often matter to investors more than anything else, since great results come from strong personal fit, solid skills, and shared professional interests. Since the beginning of our communication, Hacker Noon’s founding team impressed us with their management skills, ability to move fast in the changing business environment, and experience in PR, Content Marketing, and Education. With their solid background, David Smooke and Linh Dao Smooke have a huge potential to bring publishing media to a multimillion global brand.
Both founders, who are business partners and also husband and wife, impress us with professional, management and fundraising skills gained both in global enterprises and in their own initiatives. David has over 10 years of experience in marketing, writing, and media — notably as the Marketing Director of SmartRecruiters ($115M raised) and Linh graduated from Brown University, founded Vietnam’s 1st non-profit platform for kids to develop critical thinking, the Creative Kid Project, and was a marketing leader at the Minerva Project ($176M raised).
Founded and backed by entrepreneurs with mobile apps, product, and digital media backgrounds, Genesis Investments will be a strong partner for Hacker Noon. As Hacker Noon’s partner, we will support the company with our recruiting resources, digital marketing and product expertise, and will encourage close cooperation between Hacker Noon and our other portfolio companies.
Digital media is booming and Genesis Investments wants to be a part of it
Although the global media and entertainment market slowed down due to the global recession in 2020, it will take less than a year to recover to pre-crisis level, as shown at global entertainment and media market value chart:
According to the predictions above, by 2021 we expect the market to start exploding again, reaching $2.5 trillion in 2024. In addition to quantitative growth, we will also see a qualitative change of the Media industry, as it will eventually become more technologically advanced, adding more value to the audiences than ever before.
Within the past 10 years, media has steadily gone digital and adopted new formats. The technological disruption of the last years was beneficial for both publishers and readers. Digitalization makes production easier, changes the cost structure and opens up new monetization opportunities. At the same time, it is super easy and convenient for readers to open a web page on a smartphone in seconds and scan a volume of news that would hardly fit into a newspaper. Such content delivery is fast, convenient, and shareable. Moreover, these trends are also reflected in some promising statistics: in 2018, for the first time, digital media surpassed traditional media globally and continued to boom until now, as shown at time spent per day with digital versus traditional media from 2011 to 2020 chart:
Digital media not only exceeds traditional media but also gains popularity on its own: the average time spent with digital media per day increased from 6 hours 24 minutes in 2019 to 7 hours 31 minutes in 2020 and continued to grow.
Seeing this quantitative growth and structural shift in the Media industry, we decided to join the trend and invest in a strong Digital Media market player. And when we saw the opportunity with Hacker Noon, we didn’t hesitate and joined the round immediately after our standard due diligence process.
In the future, user-generated content comes first
As Media goes through modernization, the roles of intermediaries change. While journalists are indisputably important for bringing reliable news, the idea to publish content directly to readers has also proven its viability, mainly because people often trust non-journalists, or, the source. The data from Ipsos MediaCT’s Research shows that user-generated content creates more trust among users:
For example, 68% of people trust peer reviews and opinions. At the same time, 64% of respondents also highly value professional publications. To win the battle, online publishers provide strong user-generated content support and engage professionals to go directly to consumers.
The trend is particularly pronounced in tech and business publishing: Entrepreneur magazine with 11+M monthly visits launched Leadership network to accept expert opinions, The Next Web (5+M) offers publishing for creators on their sub-branded platforms. Many other smaller sources consider these options to uplift content variety, too.
This is part of a narrower trend where platforms aim to create a trusted and curated environment for news while keeping the idea of user-generated content alive. This is how Hacker Noon works — they have their own content management system for users to submit their stories and we can see human editors’ involvement in the process: their job is to improve user's stories and manage the nuances.
Investment in Hacker Noon is a strategic opportunity for both Genesis Investments and Hacker Noon. We are joining an important trend that helps to re-architect the digital media industry and global tech community in general. VC's anticipate the future, and the future is in self-expression, personal branding, user-generated content, and high-quality information.
This is why we believe that Hacker Noon will be one of the most crucial digital media outlets for the tech community in the upcoming 5 years and beyond.