Update 2: Nov 23, 11:25 AM PST: As we mentioned in the post below, the round hasn’t yet closed completely, and the company is looking to close it $20 million, and that may mean besides Oak and previous investors, some other investor might be coming in. And the valuation is a bit higher than we initially reported: it is $90 million pre and if the round closes at $20 million, then the post money valuation would be $110 million, a huge one in news media business by any standards.
Update 1: Nov 21, 12:05 PM PST: We have confirmed from our sources that the investor is Oak Investment Partners, the big money investment firm. Oak has invested in other digital media related companies like Federated Media, Demand Media, MobiTV, Oberon Media and others.
We’re still waiting for HuffPo to respond and will have more from them when we get it. HuffPo PR has a “no comment” on the story. More after the jump.
Original post: Nov 21, 10:43 AM PST: The Huffington Post has raised another $15 million in funding, according to the Times UK, as it continues on a high growth trajectory, which also means a high cash burn….to be fair, the site’s traffic went through the roof and sky during the election season, and it has been investing a lot in expansion.
Our understanding of the third-round funding as of last week was that it hadn’t closed yet, and there was a possibility that the round may even end up near $20 million…we’re trying to get more on it now. While we haven’t confirmed a valuation, our understanding is that it is in the $100 million ballpark, post money. SoftBank Capital has been the lead in previous rounds, and Greycroft Partners has been the secondary investor, besides money from co-founder Ken Lerer and others in seed round. The site has raised about $30 million in total until now (I calculated the total amount wrong before, and wrote $40 million then..it will be close to $30 million with this round).
The election momentum surely helped them achieve the high end of what they were expecting, but does this create unrealistic expectations on the business side? The big question for the site is on two fronts: whether it can sustain the traffic post-election (the Obama administration transition process and drama is probably still helping it) and secondly, are the direct-advertising efforts scaling up, in a market that is brutal, especially for general-interest sites like HuffPo.
The Times UK story says that the money will in part be used to develop local news sections across the U.S. and also go toward more investigative journalism. I have my doubts on that exact focus, and I would venture to say not even HuffPo understands it. It has started a Chicago site, but local is hardest to scale, and with a small direct sales force at HuffPo, even harder. As for investigative journalism, HuffPo’s real daily value is in its aggregation and the spin on it, and investigative, while admirable, will not bring in the dollars needed.
More as we find out more. By the way, Arianna Huffington is doing a Q&A with Ashton Kutcher at our year-end ContentNext mixer, and even though she will be asking the questions, we will make sure she answers some too.
Staci adds: Re the questions about valuation raised in the comments: We aren’t saying what we think the company is worth. Ultimately, of course, the only real value is what someone is willing to pay for it. The estimate here is our understanding of how the company and investors value it based on the amount invested and the equity received.
For everything HuffPo, read our dedicated section.