Cheezburger, With Dreams of Domination in Internet Humor, Grabs $30M From Foundry Group, Madrona, Avalon, SoftBank
Cheezburger became a viral Internet success story on little more than the moxie of its founders and a shoestring budget. But now it has opted to take big-time venture capital to pursue its dream to become a much bigger, more lucrative empire for humor on the Internet.
The Seattle-based company that runs a network of online humor and entertainment sites is announcing today it has raised $30 million in its Series A venture round from a quartet of big names—Foundry Group, Madrona Venture Group, Avalon Ventures, and SoftBank Capital. Cheezburger, founded in September 2007, had until now only raised $2.25 million, primarily from Seattle-area angel investors such as Andy Liu and Geoff Entress. The new financing means Cheezburger is getting three new board members who also have a lot of Web startup experience—Brad Feld of Foundry Group, Greg Gottesman of Madrona, and Rich Levandov of Avalon.
Cheezburger has shown an uncanny sense for what Web surfers will find funny and popular, rolling up a series of irreverent websites such as I Can Has Cheezburger?, FAIL blog, Memebase, and The Daily What. Through a rapid-fire acquisition strategy that extended through the first half of 2010, Cheezburger says it has built a network that now attracts 16.5 million unique visitors a month. That’s a lot of people, and they are spending a lot of time on the sites, uploading and sharing an estimated 500,000 pictures and videos a month and viewing 375 million pages, or more than 22 pages per visitor per month. Cheezburger doesn’t say publicly how much advertising revenue it has been able to generate from this beehive of activity, but it has been profitable from the start, and now employs about 50 people.
Founder Ben Huh has long resisted overtures from the venture capitalists who have knocked on his door before, but opted to take the money now. At a point when growth has plateaued at Cheezburger, Huh says he and his team reconsidered the no-VC philosophy, and started wondering how far they could take the online media empire with a little more dough.
“We wondered, if we had enough money to feel safe and comfortable, would we take bigger risks?” Huh says. “We started thinking bigger and bigger.”
Feld, an early investor in Internet gaming sensation Zynga, said Cheezburger fits into his strategy of investing in already large online markets that can be transformed by a venture-sized capital infusion. Feld and Huh have personally gotten to know each other over the past year and a half. Feld says he was deeply impressed by Huh long before talks heated up on the investment front.
“What they have done to date as a company with limited capital is unbelievably impressive,” Feld says. “We think Ben and his team can grow a much, much bigger company.”
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