A partner at venture capital fund Greycroft, which backed HuffPost and TheRealReal, predicts the hot trends in media and tech startups and says how women can close the startup funding gap
- Dana Settle is a founding partner of venerable venture capital firm Greycroft, which started with a focus on media and tech companies.
- Settle managed Greycroft's investments in such companies as Awesomeness TV and Maker Studios, and TheRealReal, and now manages its investments in Anine Bing, App Annie, Bird, and Goop, among others.
- In a wide-ranging interview, she revealed the top trends in tech and media right now and why the firm is still investing in media, despite its troubles.
- She also discussed how women can close the funding gap for startup founders.
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Dana Settle is a founding partner of venerable venture capital firm Greycroft, which is known for early investments in media and tech and for backing female founders.
Settle manages Greycroft's investments in Anine Bing, AppAnnie, Bird, and Goop, among others. In the past she managed Greycroft's investments in such companies as Awesomeness TV and Maker Studios, which were acquired by Dreamworks and Disney, respectively; and TheRealReal, which went public in June.
In a wide-ranging interview, Settle revealed the top trends in tech and media right now and what kind of media companies she's looking to fund now, after a tumultuous 2019 for the industry.
Here's our interview, lightly edited for clarity:
Business Insider: After a rocky year for media companies, how do you look at the industry?
Dana Settle: We've reduced the amount we've focused on in media over the past few years because of the challenges competing with the platforms for ad dollars. It used to be you could build an ad supported media business, and that's largely gone. So we're certainly being more selective.
BI: Greycroft's roots are in media and tech. Where are you looking now to invest?
DS: We now mange $1.4 billion in investments. We'll always look for great media properties, but we think about how it's integrated into existing businesses. We do continue to look for pure-play opportunities, like [Greycroft investment] Axios. Going into 2020 we have political winds in your favor. So we do look for things where there's an underserved audience and a team that does it in creative ways and omnichannel.
In general, almost every company we invest in has to have a media strategy, a content strategy. Because it's the only way you can control your own destiny with the image with the consumer and not being dependent on any one platform, which we all learned the hard way. I look at our investment in Goop, which is an integrated and ecommerce business. Direct-to-consumer companies in general should have a media and content strategy that will allow them to own their relationship to the customer.
I'm really bullish on holistic brands like Goop, apparel brand Anine Bing, who launched a fashion brand very organically. All their marketing is through their own site and Instagram. She launches a new collection literally every Tuesday. People go to the site to see what's new.
We're also looking at infrastructure as you have more people creating content on all these different platforms. We recently invested in Lightricks, a photo and video editing platform that's used by so many influencers that drive their business. The content business is changing so fast, it's becoming so critical.
BI: Engagement is such a buzzword. How do you measure it?
DS: We want to look at it relative to your peer set. And the utility component. Even if it's entertainment, if you find utility, value in your life, if it's a daily habit. And the length of time people are spending. It's hard to generalize, but we look at daily active users, weekly active users, are really important. We look at a lot of external data sets. We look at App Annie a lot. If there's purchasing involved we look at credit card data from Second Measure, Earnest Research. [App Annie and Earnest are Greycroft investments.]
BI: What did investors get wrong about digital media?
DS: Consumers are naturally segmenting into niche areas and advertisers are going to have to figure out how to reach them. Some will be able to break out. They may be less than $100 million in advertising revenue, but they'll be able to scale other businesses on top of them.
BI: Outside of media, where are you placing your biggest bets?
DS: We're spending a lot of time in health tech, wellness, insure-tech and fintech, where we've had success in the past like Venmo and Braintree. We also have a significant focus on SaaS. We also continue to look for great opportunities in terms of marketplaces and new customer acquisition tools. Dirty Lemon did a great job early on with text as a user acquisition channel. It's great how a company can grow with a great hack like that.
BI: You were a big investor in Bird, a market that's faces some skepticism. What did you see in Bird and do you see consolidation in scooters in 2020?
DS: It's related to the theme of sustainability. Bird launched with scooters but is focused on micromobility as a whole and solving the urban congestion problem so we're really excited about how to solve that last mile problem. The founder and CEO Travis [VanderZanden] has continued to see around corners.
There will continue to be consolidation as it's challenging to operate at scale. You have to make successful investments in the hardware to have really rich unit economics over time. [Bird] has already started to, acquiring Scoot, and they're constantly looking for smaller regional players. They're beta testing a new device in Santa Monica that's almost like an electric motorcycle that has greater distance potential. And they have a number of other things in development, like a children's scooter it's rolled out in 100 markets in 2 years.
BI: What led you to invest in a CBD company, Prima, this year?
DS: We've been intrigued with CBD as an ingredient, and it's been legalized and rolling out more prevalently. One of the benefits of being an investor in Thrive Market, a marketplace for healthy living, is that we are able to see data in search results, and early on CBD became an ingredient people were searching for.
BI: How can we close the funding gap between men and women founders, and what advice would you give female founders?
DS: All we can do is make sure we're hiring great women and be mentors for other women in the industry. I don't want to generalize. It is a natural human thing to present to people you feel more comfortable with. There are more early stages that are women, and there are a lot fewer growth investors who are women. It's encouraging female founders to take their companies all the way.
The real change takes place when female founders build bigger, independent companies, like Stitchfix, TheRealReal. They're creating more wealth across their cap tables and the cap tables tend to be more diverse, so that gives more people opportunity to become an angel investor.