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New Venture Opportunities In Social Media

Ankur Jain
Ankur Jain
Vice President, 
Blumberg Capital
Founded in 1991, Blumberg Capital is an early stage venture fund based in San Francisco focusing on Digital Media, Social Media, Mobility, SaaS, Technology Enabled Services and Internet. Some of its portfolio companies include HootSuite, MomTrusted, Sonar and Yap.tv. Very flexible with its investments; the fund varies from as little as $100,000 or as much as several million. It has investments in North America, Europe, Israel and India.

The social media juggernaut has increasingly gained momentum over the past few years and the pace of adoption has been astonishing. 70 percent of all internet users are now on Facebook and consumers spend more time on Facebook than any other web property. And this is a global phenomenon. Some countries such as Israel, Argentina and Turkey are heavy "social networkers" with over 10 hours spent per user per month on social networking sites. The U.S. average is about seven hours. As this fire continues to spread, it is natural for an entrepreneur to want to leverage this mega-trend to build a business. So there have been a flood of "social" companies that have arrived on the scene. It doesn’t take a lot of heavy lifting to attach the word "social" to your business, but it does take creativity and domain expertise to create a truly disruptive business.

It is useful to classify the social media landscape into two segments –

* Applications that leverage the social graph. I use the term "application" to cover a rather, broad spectrum. Many applications refer to themselves a "platform" which to me just means that these applications allow other add-on applications to be built on top. For instance, Spotify is an application for consumers to enjoy music while interacting with others.

* Infrastructure to support the ecosystem of these social applications. For instance, Hootsuite is a social media dashboard that allows users to monitor and manage communications to multiple social media sites. Another example is Nanigans which is a Facebook advertising solution.

The approach to innovation is different for each segment. Innovating in the applications arena requires that you consider each business problem and take a fresh look on how it can be solved better while harnessing the power of the social graph. For example, consider the case of lending money. Many countries lack an organized credit reporting and scoring infrastructure. A startup named Lenddo uses a person’s social graph to score their credit worthiness and uses their desire to maintain social status as a lever to minimize default. As another example, a startup named MomTrusted, helps parents find early education and day care facilities by enabling them to discover facilities used by other parents in their social network and to gauge how satisfied they are with those services. It is not about just adding a social layer to how things are done today but taking a fresh look to design a solution from ground up. So there are opportunities to disrupt existing businesses in every sphere – travel, entertainment, recruiting, retail, investing and the list goes on.
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