Last week venture capitalist Paul Kedrosky mentioned that he wasn’t too psyched about most of the Web 2.0 outfits because they required little capital and did not present massive paydays for investors.
He must have been thinking of Seattle-based Newsvine, who after raising less than $2M in funding today announced it was selling to GE/MSFT offspring MSNBC.com, marking the online news site’s first acquisition in 11 years.
With just more than a million monthly users, Newsvine not only is dwarfed by its new parent, MSNBC.com, which attracts more than 29 million users a month, but it also widely trails such competitors in the news-social media field as Digg.com, Reddit.com and the latest incarnation of Netscape.com as a social news site, Propeller
Interestingly, this marks the latest traditional media to make a move into social news and citizen journalism: News Corp. bought Newroo, as GigaOm points out, and Conde Nast bought Reddit, and expect many more such moves as the high-cost structure of traditional news organizations forces media companies to reassess their strategy and shuffle their holdings accordingly.
Newsvine will remain independent, but based in Seattle, it made sense for MSFT (the tech partner in MSNBC.com) to fancy it more than the remaining independent services Digg.
Of course, geography wasn’t the only factor: Newsvine was probably much, much cheaper than Digg too and is more focused on news whereas Digg seems to be more tech coverage oriented.
All in all, interesting that founder Mike Davidson mentioned that he could have raised a new round of funding and remained independent but decided to sell in the all-cash deal. Terms were not disclosed, but with the 2008 elections close and traffic - and advertising to increase next year - one would have thought that it would have made more sense to sell in late 2008 or 2009, but becoming a member of the MSFT/GE family is definitely not a bad option at all.
Hats off to the entire team and backers on the deal, which was in the works since May.
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