Two days ago, faux-TechCrunch technology news site VentureBeat reported something startling: they’ve heard through a source that BuzzFeed may be raising an enormous $200 million round sometime in the future. Many people believed the report, for one reason: it seems entirely plausible that BuzzFeed, now worth around $1 billion after Disney’s valuation, can raise such a huge round. After all, it seems like BuzzFeed is one of the few content-producing companies investors actually want to invest in.
But the report seems entirely fabricated. And there are two reasons why.
First of all, it’s almost inconceivable to any industry insider that BuzzFeed, who raised a $20 million round just last year, is considering yet another round at ten times the previous amount.
To date, BuzzFeed have raised four rounds of financing, with overall amount totaling $46 million. Unless BuzzFeed demonstrated stratospheric growth within one year, $200 million is an unthinkable reach.
Secondly, VentureBeat’s report is the epitome of bad journalism: the report doesn’t state anything definitively, nor does it offer any proof other than an anonymous source. The report also incorporates plausible deniability from the beginning till the end, to shield VentureBeat from having to take up any blame if the report doesn’t pan out in reality. The report, at this point, seems nothing more than a bunch of wild guesses conjectured by a bored journalist on a slow news day.
But let’s take a look at why… I’ve annotated VentureBeat’s entire report below to point out the glaring flaws:
BuzzFeed may raise a $200 million funding round — its fifth to date — a source close to the matter claims.
Red flag #1: the writer used the word “may”. Maybe BuzzFeed will, maybe BuzzFeed won’t. Strong plausible deniability in play here.
Red flag #2: only one source (and an anonymous one, at that) was able to corroborate the story.
It’s unclear how far along talks are, nor is it clear who will lead the round, although existing investors NEA, Lerer Ventures, RRE Ventures, Hearst Ventures, and SV Angel may participate. When reached for comment, a BuzzFeed spokesperson provided VentureBeat with the following statement: “We don’t comment on rumors and speculation.”
The writer is basically saying, “we don’t know what’s happening.” Being “unclear” of how far along the talks are means that the financing may be tomorrow, next week, next month, next year, or even in the next decade.
The writer just doesn’t know. There’s no projected timeline.
This is, of course, great for VentureBeat because as long as BuzzFeed raises a $200 million round (if that) in its existence, they would be able to point to it and say, “we said so first!”
The writer also doesn’t know who will be leading the round… so at this point, the only thing that’s somewhat confirmed is BuzzFeed looking to raise a $200 million round.
According to VentureBeat’s source, the $200 million figure is seen as a median estimate; the round may fall above or below that line.
Wait a minute… so the only thing this entire report is based off… is not even confirmed?
Why write the report in the first place if the writer can’t even nail the number? Saying the round “may fall above or below” $200 million can mean anything in the world: BuzzFeed may end up raising a $50 million round, or a $400 million round.
Either way, VentureBeat’s report will still be technically “correct”.
There’s really no way to fault VentureBeat here…
Buzzfeed’s last funding round back in January 2013 saw the company raise nearly $20 million at a rumored valuation of $200 million. Following its last round, Buzzfeed reportedly planned to expand its mobile and video products. To date, Buzzfeed has raised $46.3 million.
BuzzFeed’s list posts and experiments in long-form journalism reached an “audience of more than 130 million unique visitors in November ,” according to an official press release. Yet, BuzzFeed took a few blows to the chest this month: The site’s Facebook traffic has reportedly tanked, and BuzzFeed’s longtime chief operating officer and president Jon Steinberg left the firm for British news and entertainment site The Daily Mail.
The rest of the report is just history of BuzzFeed’s past rounds and future goals, which anyone could’ve written in five minutes by Googling the term “BuzzFeed”.
If we’re basing predictions off this report, the odds of BuzzFeed raising a $200 million round is exactly… 0%.