Cheezburger network: a smart idea for investors?It is an online publishing empire built out of bored workers, stare at the cute kitten photos on their office computers. But the three-year-old Cheezburger network – home to Lolcats, as well as the fail Blog and other amazing to no more than 35 – internet crazes this week announced it had raised $ 30 m (£ 18.7 m) funding, will see quirky start aim to become the largest network of humor websites in the world.
Lolcats has become one of the Internet's most enduring crazes, combine cute pictures of animals – in General – cats with funny captions mis-spelled. The original Web site was created by Eric Shoichi Nakagawa and his girlfriend Kari Unebasami in 2007, who had been inspired by the irreverent Community site 4chan.
A year later, Ben Huh, now Chief Cheezburger network and the man credited with taking internet "memes" (thoughts) to the mainstream, bringing angel investors together to buy site for $ 2. 25 m. Three years on Huh has extended Seattle-based company to the point where it employs 50 employees and has launched almost 50 niche humor sites including graph jam, with its witty pie charts and Engrish Funny, home to the good observed translation errors.
Eking out that investment for three years, managed to ensure the company Huh was profitable from the start, flood the site with advertisements on 375 m page views it generates each month as well as selling merchandise such as Lolcat t-shirts, mugs and fails Cheezburger desktop calendars. Its popularity could rival many mainstream media organisations; a masterclass in the art of aggregation simple, cheap content created by users, letting its popularity careful distribution and building as much revenue as possible around.
Foundry group – which also has invested in Farmville game company Zynga – led the new $ 30 m investment round, together with Avalon Ventures, SoftBank capital and Madrona Venture Group. Madronas Executive Director, Greg Gottesman, told the Seattle Times Company was "a great entrepreneurial history". He added: "Funding allocated, the size of the has built with such limited capital, so few people are really impressive."
The company's plans to move to larger offices and double its staff to 100 by the end of the year. The investment will also finance the extension of the Web site's international audience, but the company scales down its strategy for quickly kærning out experimental new sites. That approach has had mixed success, allows the company to exploit and respond rapidly growing internet memes and virals with a failure rate of only one in five.
James Whatley, marketing director of analysts 1000heads, said Lolcats investors was not as crazy as you may think, because the network had room for growth. "If you spend any amount of time on any of the above sites, it is immediately clear that they are behind on the social functions. The whole network needed a declutter and tidy up, and before you begin the element the whole inventory and in advertising. With the right investment, there is a lot more money made. "
But other analysts were less impressed and reckoned Cheezburger fundraising was as much about the amount of cash, are seeking a home as the prospects for a Facebook-style business success.Reuters breaking views blog said investors "skirmishing to finance oddball ideas" illustrated venturekapitalindustriens problems. "The result of not having cash is that entrepreneurs can command immense prices for their babies. In view of the risk associated with start-up companies and the need to lock up capital, is it not strange, new commitments to venture capital funds fell four years in a row. You can have too much money chasing too few Cheezburgers. "
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