• Dec. 8, 2016, 9:52 pm

Guest post: Why we’re using an IPO to access growth capital

This is a guest post from Geoffrey Campbell, president of NewsBeat Social.

Until recently, the idea of accessing equity growth capital without going to venture capital providers was only hypothetical. VC backing was virtually a necessity. They were the only game in town that had the large amounts of capital, important relationships, experience, and ability to assess growth plans and valuations necessary to move a company beyond its early stages.

When it came time for us to move beyond our early stage, NewsBeat Social had to decide between a traditional VC-backed approach and the newer, and less traveled, route of a Regulation A+ IPO under the SEC’s new rules. Making this decision, we were challenged to think hard about the objectives of this fundraising, the pros and cons of these new rules, and how our choices about financing would ultimately affect how our news agency operates.

There are a lot of good reasons to choose a Reg A+ IPO, not least of which is the ability to retain a larger amount of control over your business after the investments come in. But, as important as these considerations are, it wasn’t clear to us that they outweighed the value a VC brings to the table.

Thinking through the decision, we looked more closely at the core values of our business. As a next generation news agency, we embraced the fact that innovation would lie at the heart of what we do. But as a news company, we knew it would be transparency, fairness and accuracy that would help us build the kind of trust with our audiences that would allow us to thrive.

There’s a strong element of transparency in the IPO process, and in being a public company. For many companies, the idea of opening its books to the public and to regulators is a necessary if unpleasant dose of medicine-taking. But as an emerging news organization, it’s something we court. We need not only to communicate but also continuously demonstrate transparency to our audiences.

But that’s not enough. NewsBeat Social was founded on the belief that large swaths of the public have been disenfranchised by traditional news formats which today are ill-suited to the needs of busy people living fast-paced, interconnected lives. In the 21st century, a news organization that requires an audience member to adapt his or her life to its format has failed its mission. If the news organization demands attention rather than attracting it, or cannot make do with the few precious moments people can spare each day, then, again, it has failed its mission.

This is what we realized as we thought through the Reg A+ IPO funding path: Bringing people to the news is no longer the critical mission of the news industry. It’s the other way round. Our job is to bring the news to people, wherever they may be, and however each individual audience member may prefer to consume it.

As we evaluated the funding options available to us, it became clear that given our mission and the basis for which we founded the company, who better to support our vision than those who directly benefit from it and appreciate firsthand the differentiation of our model. Unlike a traditional growth equity fundraising, a Reg A+ IPO process would be inherently inclusive of those who continue to drive our success and validate our view on what a news agency should be. It would also mean when afforded the opportunity to participate in the growth of our company, our audiences could have a part in what we do and how we do it.

Thinking of a news audience in this way — not as a passive spectator but as an active participant — presents profound and exciting ideas about the future of news. But to say that we’ve been responsible for creating these ideas would be inaccurate. Rather, the sea-change in how the individual and the corporate entity (in the broadest sense of that term) relate to each other, brought about by the harnessing of the power of the crowd, is what’s precipitating this opportunity for change.

As we proceed, we’re learning more and more about the opportunities inherent in the Reg A+ IPO process. During this process, we’ve taken home many lessons about our company, our audience and our industry. While the Reg A+ process may not be right for every company (or even for many), we believe the process is well suited to our innovative culture and aligns well with the core vision on which our company was founded.

Geoffrey Campbell is president of NewsBeat Social. Prior to his role at NewsBeat Social, Campbell founded and lead AllSay, a personalized news app that was acquired by NBS in 2015. Former executive DISH Network, Sony, Boston Consulting Group.

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