Great entrepreneurs choose their investors — investors who understand how products and companies get built, and know that investor control helps no one. The best investors are often themselves entrepreneurs, and vice versa.
Former IGN Entertainment Head Roy Bahat, will be at the helm of Bloomberg Beta, a new $75 million venture capital tech fund. Bloomberg Beta, in keeping with Bloomberg L.P.’s longstanding pattern of entrepreneurialism, is focused on backing and working alongside exceptional founders. Bloomberg Beta will exists to expand Bloomberg L.P.’s horizons by investing in and creating companies within Bloomberg’s broad areas of interest. Set up as a true fund, Bloomberg Beta will invest for financial return, selecting companies independently of their current or future business relationship with Bloomberg L.P.
“Bloomberg Beta is a natural extension of the entrepreneurial spirit and culture of Bloomberg,” said Daniel Doctoroff, CEO and President of Bloomberg LP. “We’re guided by the belief that the best investors are entrepreneurs and the best entrepreneurs are investors. Through Beta, we get to back and build breakthrough companies in the areas we care about, and entrepreneurs get an investor whose interest is fully aligned with theirs.”
Bloomberg Beta has already invested in nine fledgling companies like Codecademy, a website that produces coding tutorials and Newsle, a social media news tool launched by two Harvard sophomores. Bloomberg Beta’s initial focus areas are producing insights from data (data, technology platforms, content discovery, media distribution) and making the experience of work better (networks and communities, human-computer interaction, and radically new organizational models). While the news of the new venture has been greeted mostly with enthusiasm in business circle, it has raised a number of questions relating to the basic issue of journalistic ethics.
Anticipating these issues a spokesperson for Bloomberg News hastened to point out that the company would adhere to existing rules within the company relating to conflicts of interest. These rules forbid the company to report favorably or unfavorably on company products or services. In the few cases where Bloomberg reporters cover companies or investment firms in which the Beta has a financial investment, that fact will be clearly disclosed in disclaimers. According to PandoDaily:
“One industry it will not seek investments is the area of its parent company and sole LP: financial services. So what then, you might ask, is the benefit to Bloomberg LP of having an affiliated venture arm with no information or acquisition synergies? Bahat says that the higher-ups are Bloomberg have seen how quickly early stage companies can become relevant forces in the wider media landscape. “They want to be a part of it and understand it, and the only way to do that is to set up a structure where the entrepreneur’s incentives are aligned with their incentive,” he said. By that, he means, the deals are kept at an arm’s length from the M&A team”.
Roy Bahat, prior to founding Bloomberg Beta, led IGN Entertainment for five years, an online media company then owned by News Corporation. He is chairman of OUYA, the venture-backed hardware startup, and has served on the boards of Revision3 (through its acquisition by Discovery) and Flixster (through its purchase by Warner Bros.). Roy teaches media at UC Berkeley, and is a board member at educational non-profit CodeNow. He is a graduate of Harvard College and was a Rhodes Scholar. In addition to Bahat, the firm will have Karin Klein based in New York City to lead investments on the East Coast. Formerly the head of new initiatives at Bloomberg, she also served as vice president of Softbank’s venture fund, where she made investments in companies like Buddy Media.
TechCrunch has said that it appears Bloomberg Beta will be similar to Betaworks, in the sense that it will be investing jointly in companies and creating them.
Hayden Richards is Contributor of IntelligentHQ. He specialises in finance, trading, investment, and technology, with expertise in both buy-side, sell-side. Contributing and advising various global corporations, Hayden is a thought leader, researching on global regulatory subjects, digital, social media strategies and new trends for Businesses, Capital Markets and Financial Services.
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