VC Firms' Idea on Next Big Thing

Start-up media companies are not lacking for funding these days. Over the past few days, Rubicon Project and Quantcast announced funding on the ad side of start-ups, and plenty of others are in line to receive venture capital investments.

At AlwaysOn’s OnMedia in New York this morning a handful of venture capitalists got together to discuss what they look for when considering funding, and how they view brand advertisers in the picture.

Criteria for being selected for funding varies, with a few universal qualities resonating on the rader of the VC community. “You have to look in areas where there is a huge amount of disruption,” said Eric Hippeau, managing director of Softbank Capital.

Jonathan Miller, co-founder of Velocity Investment Group said his firm looks for “multi-platform properties. Things that can start online and move to other media.” An example of multi-platform property was only a few seats down on the panel. Tim Draper, founder and MD of Draper, Fisher, Jurvetson, is not only the VC behind the online and Nickelodeon series “The Naked Brothers Band” he plays the Principal Schmoke” on the show. The property originated and lives online, yet it’s successful on cable.

There was a consensus that digital is still very much in development. “I don’t think we’ve seen the real usage patterns emerge, we’re starting to. It’s still the very early days of seeing the true impact of stuff,” said Drew Lipsher, partner at Greycroft Partners.

Emerging online models, according to Miller, follow the early days of television. “TV was no different than Internet today, TV shows started with sponsors. [The Internet} is in that interesting realm right now.”

Digital media “Is something brand advertisers can get their hands on,” said Miller. “There’s $250 billion in brand advertising sitting in traditional media right now that over the next decade is going to have to find a place online.”

To echo the point and realize what many digital folks have learned, “A dollar of analog money translates to pennies of digital money,” said Hippeau.