Can Venture Capitalize on Curation?

The sheer volume of Web content makes it clear that content without curation is simply noise
Yuri Milner, the VC whose Russian Digital Sky Technologies (DST)
group has put money into Facebook, Zynga and Groupon, was quoted at the
Abu Dhabi Media Summit as saying, Curation is the next big thing.
Said Milner: “The question is, ‘How do you select what’s relevant for
you?’ And my guess is that it’s probably going to be 50% driven by your
network and 50% driven by algorithms.”
Upon hearing Milner’s prophetic words, thousands of PowerPoint decks
were reworked overnight to find a way to edge the word “Curation” into
executive summaries.
An understandable impulse. But perhaps premature.
What Yuri meant, and what venture is now scouring the incubators and
business plan competitions for, is a way to manage the madness that is
promiscuous production of data.
But first, let’s look back at the history of why venture has been allergic to content.
In order for investors to be able to put a small number of dollars in
— and get an outsized return out — businesses need to be able to grow
very large with relatively little human intervention.
The portfolio theory of investing requires that the hits are big, and the misses are manageable.
Content hasn’t ever fit into this equation. Studios tried to balance
hits and misses, but the spiky nature of hits and the relatively large
cost of failures has made hollywood a game that only those with money to
lose could afford to play. VCs never liked those odds.
Now, along comes curation with an entirely different economic bargain.
Curation is the mixing, and re-mixing of content to create things that are partially or wholly new.
Quickly, venture took notice. Why? Because now content wasn’t about
‘creation’ it was about finding, sorting, filtering, contextualizing.
Sure, there was a human element to curation. But the venture economic
could kick in, in ways it never could. Audiences and revenue could grow,
and margins could grow while the costs of curation remained relatively
There are some early wins already. Huffington Post’s $315 million
exit to AOL was like a starting bell for venture sized returns.
So where are VC’s looking in the curation space?
There are three categories that have the potential to attract venture dollars.

Curation software. There are
already a large number of software solutions looking to act as curation
solutions. Many of them curate the growing twitter content stream,
while others look to offer users a way to search multiple social
networks, and produce a single curated content output. Venture would
do well to look for a service that breaks out ahead of the pack – and
bet the market leader.
Curated content platforms. Sites like
SBNation, a collection of over 290 individual communities, each with
coverage and conversation led by fans. There’s no doubt that the larger
of these communities themselves will catch the eye of the Venture
community. (Comcast Interactive Capital (CIC) and Accel Partners are in
SBNation). Their move in to tech with the announcement of a deal with
the former editors of Engadget is a sign of things to come.
Platform Services. The rapidly
growing nature of web content makes it critically important that
curation and publishing platforms are SaaS offerings that have access to
scale and support. This means that while some folks will try to build
curation platforms, the large majority of content oriented entrepreneurs
will choose to build on existing or emerging curation platform

Curation has come of age. The sheer volume of Web content, and the
increasing demand of both content consumers and Web advertisers makes it
clear that content without curation is simply noise.
There is huge value that will be created as the web shifts from
content created for search to curation built to find and contextualize.
Stay tuned for big wins in this space. 
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