Chris Long, a former NFL player, hosts a podcast that’s licensed exclusively and co-produced by Blue … [+]
Blue Wire, a podcasting company that focuses primarily on sports, has raised $2.5 million of funding.
East Carolina Angels and the Pirate Entrepreneurship Fund, both affiliated with East Carolina University, invested a combined $945,000. Kevin Jones, who founded Blue Wire in August 2018, is a 2011 East Carolina graduate. Dot Capital, a New York venture capital firm, invested $750,000, while a group of angel investors also participated.
Jones owns 50% of the company, which has 250 podcasts, including ones from former NFL player Chris Long, former NBA player Richard Jefferson, Miami Heat guard Duncan Robinson and Las Vegas Raiders defensive end Maxx Crosby.
Dot Capital, Blue Wire’s second-largest shareholder, has invested close to $5 million of the $11.4 million that Blue Wire has raised since its founding, according to Jones, the company’s chief executive.
The latest investment came in the form of a convertible note, meaning it was structured as a short-term loan with the intention that it will convert to equity in Blue Wire. The company would not disclose its valuation, but Jones said Blue Wire is in the market to raise additional capital to fund its growth plans.
Blue Wire is on track to generate $10.3 million of revenue this year, up from $4.8 million last year and $1 million two years ago, according to Jones. He added that the company’s podcasts are on pace to have 124 million downloads this year, up from 60 million in 2021 and 16 million in 2020.
The company hopes to achieve profitability for the first time next year when it estimates it will generate $23 million in revenue and have 250 million total downloads.
As venture capital funding dries up due to difficult economic conditions, investors are becoming much more focused on profits than in previous years, Jones said.
“A lot of VCs are pulling back,” Jones said. “They’re just like, ‘It’s too risky now.’ People are having to find different ways to raise money. I’m proud to be getting linked up with my alma mater, East Carolina.”
He added: “Purse strings are tighter. They were a little looser in previous years, which was great for us. Everyone still has a match out there. If your company is growing fast and you have the metrics, you should be able find a handful of folks, but it’s getting harder. There are a lot more No’s and the process is going to take entrepreneurs longer to raise capital, at least that’s what we’re running into.”
For Jones, even being in a position to start and lead a fast-growing startup is more than he envisioned. After graduating college, Jones worked in the sports media industry for several years, including stints as a sports producer for the WUSA television station in Washington, D.C., a reporter for the Cleveland Browns’ website and a digital content manager and San Francisco 49ers’ reporter for KNBR, the leading sports radio station in San Francisco.
Jones dreamed of one day hosting his own sports radio show in a top market, but he grew frustrated with the lack of opportunity he saw in reaching that goal and working in a cutthroat industry. When he was let go at KNBR in August 2017, Jones started his own podcast, Striking Gold, where he discussed the 49ers.
The podcast drew about 5,000 to 6,000 downloads per episode. But Jones was only making $2 to $3 CPM (cost per thousand impressions) when he uploaded the episodes to Audioboom, an audio and podcasting distribution platform.
Jones knew there were other dedicated podcasters making similar money, so in August 2018, he officially launched Blue Wire with the goal of creating a network of sports podcasts of major professional and college sports teams across the U.S.
“I was struggling as a journalist,” Jones said. “I had an Aha moment of, ‘I might as well roll the dice as an entrepreneur. I think I’ll even get respected if Blue Wire doesn’t take off. At least I tried.’ Somehow we’ve captured lightning in a bottle. To me it’s all about relationships and building with people that you love building with. If you can hire the right people and choose the right content creators, it ultimately boils down to that.”
At first, Jones invested $17,000 of his own money to get Blue Wire started. The company raised its first outside capital in May 2019 when 500 Startups, an early stage VC firm and accelerator, invested $150,000. That August, Blue Wire hired its first employee besides Jones, bringing aboard Peter Moses, who had worked as a producer in the Los Angeles area for about a decade. Moses is currently the company’s senior vice president of original narrative and conversational podcasts.
In early 2020, just before the coronavirus pandemic began, Blue Wire raised a $1.2 million in a seed round led by Dot Capital. The company raised more money last year from Dot Capital.
“I’ve been re-upping my investment because the company’s been able to achieve its goals for downloads and revenues and expenses,” said Joseph Saviano, Dot Capital’s founder and managing partner. “I’m very happy with the performance. I think they’ve realized how to take advantage of finding new, interesting talent that’s relevant to the younger audience. That’s translated to outsize growth in the number of listens and downloads and advertising.”
Wynn Resorts
Blue Wire has kept to its roots of signing deals with podcasters who focus on specific teams in the NFL, NBA and other sports. But it also offers podcasts in other areas like business, chess and dungeon and dragons, and in the past year or so, it has expanded to partner with high-profile former and current athletes like Long and Jefferson.
As part of the WynnBET deal, Blue Wire licenses Long’s popular Green Light podcast, co-produces the podcast along with Long’s Chalk Media company and helps with advertising sales and other business and operational functions.
In January, Blue Wire struck deals to handle sales, marketing and production for “Road Trippin’,” a podcast hosted by Jefferson and former NBA player Channing Frye, and “The Long Shot,” hosted by Robinson. Jones said athletes find Blue Wire an attractive partner because of the company’s reach and the fact that Blue Wire does not own or operate the podcasts, giving them the freedom to speak freely and retain their intellectual property.
“We want (Long) to be his exact self,” Jones said. “Richard Jefferson is the same way. He’s entrepreneurial. He wants to tell his own stories with no filter at all. But they need an ad sales partner, they need production, marketing. How do we help grow the audience? They could take this content all to ESPN but then they get put in that machine, they have to say thus, promote this on the podcast. Athletes want to keep their digital content. It’s like church and state. Thy want to keep it separate from the bigger entities. They want to own it and plug it into somewhere like Blue Wire. More and more athletes are seeing the future of this.”
Blue Wire generates about 75% of its revenue through advertising, with podcasters sharing in the ad revenue based on the number of downloads they receive and other metrics. Podcasters working on their own usually use programmatic ad sales, where a third party handles the process of automatically buying and selling ads, leading to low CPMs. But Blue Wire’s sales staff is able to leverage the company’s reach to strike more lucrative deals with advertisers, which benefits the individual podcasters, according to Jones. Blue Wire has worked with more than 50 advertisers this year alone.
“I’m trying to make the experience as awesome as possible for podcasters,” Jones said. “They get a clear receipt from us at the end of every month of here’s your payout, here’s why, here are the ad campaigns you were a part of. Everything that was wrong with the industry four years ago for me I’m trying to fix.”
The remaining 25% of Blue Wire’s revenue comes through other avenues such as licensing agreements and working with brands, including Mountain Dew, on their company podcasts. The company also works with YouTube and TikTok influencers.
The podcasting industry has had some business success stories among startups, most notably with Spotify paying $230 million in 2019 for Gimlet Media and $250 million in 2020 for The Ringer, which was founded by popular former ESPN personality Bill Simmons. Gimlet is perhaps the only content publishing podcasting company to raise a Series B round, while the others were bootstrapped with less capital or without the help of the VC community.
“(The podcast industry) is so new that some venture capitalists can’t see huge exits because they haven’t happened,” Jones said. “I think that’s a narrative. All entrepreneurs will battle some kind of narrative right now but the podcasting narrative is, ‘There’s not been very many venture-scale businesses. Why you guys?’”
Down the road, Jones envisions media companies, radio conglomerates, sports gambling operators and over-the-top streaming platforms as potential buyers of podcasting companies like Blue Wire. But for now, Blue Wire is focused on continuing its growth and focusing on the bottom line.
“I saw the technology bubble burst in 1999, 2000,” said Saviano, who has worked in venture capital and private investments since the early 1990s. “This is getting similar like that where all the VCs and everyone in the world is telling their companies to get to profitability as fast as possible…We never raised a huge round and we never had the big burn rate, so we’re in a good position to manage through this phase.”
Source: https://www.forbes.com/sites/timcasey/2022/07/06/sports-podcasting-company-blue-wire-raises-25-million-eyes-profitability-in-2023/