Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Venture Funding in the Book Publishing Industry

4,612 views

Published on

These slides accompanying my January 2014 blog post "The Book Publishing Startup Problem" at http://thefutureofpublishing.com/2014/01/the-book-publishing-startup-problem/. You'll find there also the accompanying Excel spreadsheet.

Published in: Education, Business, Technology
  • Login to see the comments

Venture Funding in the Book Publishing Industry

  1. 1. Venture Funding in the Book Publishing Industr y Thad McIlroy thefutureofpublishing.com Vancouver & San Francisco January 11, 2014
  2. 2. A Brief Overview     Book publishing is not a major industry Book publishing is not growing nor is it significantly profitable Physical book retailing is under threat, and that threatens the balance A single dominant company (Amazon) is calling most of the shots
  3. 3. In Perspective Here’s is the smallest member of the 2013 Fortune 500. Nash-Finch is in the food distribution business and has sales of nearly $5 billion per year. RR Donnelley, the largest U.S. printer, had 2012 sales of $10.2 billion (10% market share).
  4. 4. In Perspective: The Largest (‘12) Penguin Random House HarperCollins Macmillan Simon & Schuster Hachette Total $3,660,000,000 $1,200,000,000 $ 825,402,500 $ 800,000,000 $ 572,250,000 $7,057,650,000 = 50% of trade sales; 25.3% of total books sales
  5. 5. What’s in the Numbers?      Over 600 startups About 7% of those startups have recorded investments The average investment is $70,000k +/Remove the half-dozen over $10m and the average investment is $35,000k +/2.5% startups have “cashed out”
  6. 6. Ignore the Exceptions? These aren’t likely to repeat    Kobo sold to Rakuten for $315m Goodreads sold to Amazon for $150m Microsoft invests $600m in Barnes & Noble NOOK
  7. 7. Books vs. Mags vs. Newspapers    Several of the startups cross the space between books & periodicals. The blurring of the boundaries is encouraged by the likes of Kindle singles – in some cases long magazine articles repackaged. While newspapers are issuing ebooks in a flurry, there’s no real industry crossover The big difference is that the names of periodicals are the brand; for books the author is the brand
  8. 8. In Perspective: VC Dollars
  9. 9. Hot Start-up Industries No book publishers here. February, 2013
  10. 10. Another View
  11. 11. We Want to Believe in “Media”
  12. 12. “Media and Entertainment” Defined “Creators of products or providers of services designed to inform or entertain consumers including movies, music, consumer electronics such as TVs/stereos/games, sports facilities and events, recreational products or services. Online providers of consumer content are also included in this category (medical, news, education, legal)” No book publishers here.
  13. 13. No M&A Activity (via JEGI)
  14. 14. Judging Investment Value     Existing industry, in a period of growth (such as new homes) New industry, expanding rapidly (home medical devices) Existing industry with new opportunities (Apple with tablets and smartphones) Transformative technology addresses an unmet need (Uber for catching cabs at tough times in big cities)
  15. 15. Condemning an Investment       Mature and declining market Fragmented market Not significantly profitable Difficult to access internationally At risk of structural fragmentation (no more bookstores) Dominated by Amazon
  16. 16. The Proof is in the Pudding     All media markets have a “sex appeal” that attracts investment Yet book publishing has attracted less than $350 million in the past five years Three companies have had strong payouts, but most are failing even to get second-round funding. Just one IPO (Chegg) – not promising
  17. 17. What About Those IPOs?  Forget it. According to the authors of the 2014 Tech IPO Pipeline Report: “There are no publishers on our lists. The closest thing would be VICE media, but they're primarily online.”
  18. 18. Yes there are acquisitions ...but they aren’t startups
  19. 19. VCs aren’t Watching Publishing
  20. 20. Mark Coker on Flattening Sales  “A fast-growing market causes players to misinterpret their success... It’s when things slow down that your business model is tested. The market is slowing. A normal cyclical shakeout is coming.” — December 30, 2013
  21. 21. AngelList: The Forgotten
  22. 22. AngelList: Can’t We all Just Sound the Same?       “Making ebooks easy” “Building the future of ebook reading” “iTunes for ebooks” “A reading revolution” “Reinventing non-fiction book publishing” “A community within every ebook”
  23. 23. Gust: Never Visited
  24. 24. Collaborating with Startups Source: Dosdoce.com
  25. 25. Conclusion I   I don’t have a happy face to splash on the challenge of attracting venture dollars to the book publishing industry: I don’t believe that it will happen in any systematic fashion The one way that book publishing often overlaps newspapers: it’s an excellent way for the wealthy to indulge their egos
  26. 26. Conclusion II   I think the investment confusion arose because many thought that an industry in the throes of digitization should be an industry worth tossing VC dollars at Just because publishing is going digital doesn’t mean that there’s a new road to publishing riches. It’s the same tough slog
  27. 27. My Background • 8 years in bookselling & publishing • 15 years in the U.S. studying the intersection of technology & print publishing @ Seybold • 10 years at The Future of Publishing.com • Co-author The Metadata Handbook
  28. 28. The Metadata Handbook: A Book Publisher’s Guide to Creating & Distributing Metadata for Print and Ebooks Renee Register, DataCurate Thad McIlroy, The Future of Publishing Available both in print and ebook formats Published December 2012 themetadatahandbook.c om
  29. 29. For further information Thad McIlroy thad@thefutureofpublishing.com Publishing rights for this document: This license allows for redistribution, commercial and non-commercial, as long as it is passed along unchanged and in whole, with credit to Thad McIlroy at The Future of Publishing.

×