Berkeleyside.com Raises $1 Million With News Industry’s First DPO
In these generally miserable times for local news, Berkeleyside.com has had quite a different experience. It recently raised $1 million from its Bay Area Berkeley community in the first direct public offering (DPO) in the news industry.
The established pure-play is now putting together a guide for how other news providers can convince their communities to make the same kind of high-response “impact investment.”
In this Q & A, co-founder and Managing Editor Tracey Taylor explains how Berkeleyside pulled off its precedent-setting DPO, and, on top of that, raised $200,000 more than it had originally hoped.
Let’s start with you and your co-founders, Executive Editor Frances Dinkelspiel and Publisher Lance Knobel, veteran journalists all. While you’re managing editor, you have also been busy reporting recent articles about schools, crime, a missing boy found and “dockless, shareable” bikes. Dinkelspiel and Knobel also go into the street to cover news. Please explain.
We all do everything. We report, edit, and assign stories. For a long time, everything that needed to be done, we did it, on the business and editorial sides. That will be changing a bit as we are growing to an eight-strong team. Lance will be more active on the publishing side.
Does Berkeleyside cover the entire East Bay?
Our core coverage is Berkeley, but we’ve broadened our geography to the East Bay—Oakland and smaller nearby towns—to include coverage of food, real estate, and housing and development. But the hard news, breaking news and subjects like schools, we only do Berkeley.
What’s your news and business model?
We’re a for-profit news operation, and that was a conscious decision we made when we launched in late 2009. We didn’t want to spend our time applying for grants. We didn’t want to be dependent on foundations. We thought that was a risky strategy. The landscape on that front has changed. There’s a lot more money from foundations flushing around today, and that’s a good thing.
We have three revenue streams. The first is advertising, which presently accounts for 60% of our revenue. The other two are reader revenue. One is membership, where readers can make a contribution—maybe $10 a month. We also do events where we sell tickets and get sponsors. Our biggest event is the annual Uncharted Berkeley Festival of Ideas.
What about digital subscriptions, which many local news sites have started?
We are committed to publishing our content for free. We never even entertained the idea of doing digital subscriptions.
What kind of relationship does Berkeleyside have with its community?
We have an incredible relationship with our community. There’s a huge amount of goodwill toward our site in Berkeley and the other communities we cover.
We rely on readers to give us tips and let us know what’s going on. We can’t be eyes on the street everywhere. We get inundated—emails, tweets, Facebook messages and phone calls—like, “I see cop cars on my street,” or “Here’s a video of a fire” or “Something’s going on in my kid’s school, and I think you should investigate.”
It’s a two-way relationship. We rely on our readers and our readers rely on us. We don’t do citizen journalism. But we do have a lot of community feedback. We have an enormous comment section.
In 2017 you averaged 400,000 unique visitors monthly. How did you achieve this reach?
Our readership grew organically. It began with word of mouth. We also have a daily email that recaps every story we publish.
The primary reason for our strong readership is that people trust us with our reporting, which includes a willingness to admit when we get something wrong. We’re very transparent.
Is Berkeleyside profitable?
No. The plan is to be profitable in 2020.
Berkeley is not the average American community, is it?
We struck lucky. This is a very special community. People tend to be very highly engaged. They’re well educated, on the more affluent side relative to other communities. They’re very active in all areas of civic life.
Still, about 20% of Berkeley’s 120,000 population is poor, well above the national average of 12.7% (even if that percentage is skewed upward by the high number of non-wage-earning students of higher education in the city). Does that income gap get close coverage in Berkeleyside?
Our stories on housing insecurity, schools, the community, and crime take in all Berkeley neighborhoods.
What kind of relationship do you have with Facebook? Do you rely on the platform to send you visitors?
We post every story on Facebook, and it is a good driver of traffic. We do Facebook Live and marketing campaigns with Facebook. However, we tried Instant Articles and didn’t like it. And we would like to wean ourselves off Facebook eventually or at least be less dependent on it.
What about competing news providers in the Bay Area?
There’s the San Francisco Chronicle, published by Hearst. There’s the East Bay Times, part of the Bay Area News Group published by Digital First Media. But these papers don’t have beat reporters covering Berkeley.
We have partnerships with the Chronicle and the local NPR affiliate KQED, where they run our news because they just don’t have the capacity to cover our area as intensely as we do.
This intensity and Berkeleyside’s relationship with its community must have been big factors in the success of your $1 million DPO.
I totally agree. We have a community that’s ready to support independent journalism financially. We call it an “impact investment.”
What’s unique about a DPO?
Unlike making an initial public offering (IPO), a company uses a DPO to raise capital directly and without an underwriting from an investment banking firm or broker-dealer. So all the money raised goes into the company’s investment.
You attracted 355 investors from your community. Did you do a lot to promote the DPO?
We did. We did email campaigns. We had a dedicated website. We had “house parties” where we would bring together 50 to 60 people we thought would be amenable to contributing. We did social media campaigns. Probably most significantly, we went out and spoke to people one on one. We pitched people in their homes, and that was very effective.
We are the first news organization to do a DPO. It’s hard work and you have to go in different directions. It helped that we were a known and trusted quantity. We’ve been around for nearly nine years, and people know what they’re getting. I wouldn’t underestimate the amount of work it takes to do this, though.
Did you and your partners raise capital to start Berkeleyside?
No, we bootstrapped. We started getting advertising after about six months. We also launched our membership program early on.
We hired people and gave them good salaries and benefits. But the founders didn’t take a living wage for many years.
Could other local news sites do what you did with your DPO?
Definitely. The secret ingredient is, if you provide high-quality journalism, and have a significant community that appreciates that and responds, then the “ask” is a no-brainer.
What are you doing with the $1 million you’ve raised?
The most important thing has been making our site more mobile-friendly and mobile-first. 50% of our readers come to us through mobile. We also hired a second full-time reporter, and we’re putting more resources into our events and membership programs.
How much of your investment money remains?
About $800,000 is left.
Do you have advice for other local sites about your success with your DPO?
We’re committed to helping them use DPOs. With $60,000 in assistance from the Lenfest Institute for Journalism, we’re putting together a detailed guide for a DPO, including all the legal stuff, that should be coming out next month.
What’s next for Berkeleyside?
We are investing in our membership program to really take it up a notch as another way to generate financial support from our readers. And we’re hoping to build up our live events.