Starting up the news: VC & the digital news media ecosystem

Allie Kosterich Matthew S. Weber

Rutgers University Department of Communication

Annual Meeting of the Association for Education in Journalism and Mass Communication

Minneapolis, MN August 5, 2016

comScore via wired.com

(December, 2014)

Overview Theory Data Results Conclusion

Overview Theory Data Results Conclusion

Community Ecology

•  Innovation from the outside and recombination within a population (e.g. Ruef, 2000)

•  Ecological characteristics (resources, diversity) impact organizational change (e.g. Lowrey, 2012)

•  de alio (diversifying incumbents) and de novo (new entrants) (e.g. Carroll et al., 1996)

Overview Theory Data Results Conclusion

Hypotheses

H1: Venture capital funding is positively associated with de alio organizations in the digital news media space.

H2: Venture capital funding is positively associated with the age of a digital news media organization.

H5: Venture capital funding is positively associated with centrality in a given network of investors and media companies.

Overview Theory Data Results Conclusion

Summary statistics

Variable Mean SD Press count (log) -0.27 0.92 Funding (log) 2.70 1.58 Years in operation (log) 1.29 0.40 Category count (log) 0.42 0.34 Betweenness centrality (log) 0.21 0.57

N = 104

Network visualization 2-mode news organization and investor network

Legacy news media

Startup news media

Individual investor

Firm investor

Overview Theory Data Results Conclusion

Overview Theory Methods Results Conclusion

OLS regression results for analysis of funding

Model I: de alio vs. de

novo

Model II: years in

operation de alio vs. de novo 0.51* Years in operation 1.33** Press coverage (log) -0.04 0.22 Diversity (log) -0.08 0.41 Betweenness centrality (log) 0.03 0.80**

Notes: Standardized coefficients reported. Standard errors are in parentheses.

* = p < 0.05, ** = p < 0.01

Model I F(4,99) = 4.26, p < 0.05; Model II F(4,99) = 7.47, p <0.001

Theoretical Implications •  Tension between organizational age and centrality of

network position •  Cross-community engagement: innovation from the

outside, bridging a resource space

Practical Implications •  Balance between position and experience •  Organizational and network characteristics that attract

funding

Overview Theory Methods Results Conclusion

Limitations •  CrunchBase •  Sample size •  Dichotomous categorization of organizations

Future Research •  Cross-sector engagement •  Innovation from the outside •  General merging of news media and technology space

Overview Theory Methods Results Conclusion

THANK YOU

Allie Kosterich @allkost

allie.kosterich@rutgers.edu

Matthew Weber @mediareinvented

Appendix: Legacy

Investment in Startups

Appendix: Correlation of variables

1 2 3 4 5 6

1. de alio / de novo

-

2. Press count (log)

-

3. Funding (log) 0.16 -

4. Years in operation (log)

-0.08 0.34** -

5. Category count (log)

0.02 0.04 -0.10 -

6. Betweenness centrality (log)

0.20* 0.33** 0.05 -0.07 -

N = 104; * = p < 0.001, ** = p <0.001