If media is so important, why aren't we investing more in media startups?

According to the National Venture Capital Association, out of a whopping $164 billion invested last year, only 2% of U.S. venture capital went to media startups. That equates to less than $3.5 billion invested in publishing, journalism, photography, movies, radio, television, digital media, and advertising - an industry projected to reach $620 billion in revenue in the U.S. alone by 2025.

US Growth Equity Investments in 2020 by Sector

Source: Source: NVCA 2021 Yearbook, Data provided by PitchBook

Any successful CEO will tell you: underinvest in innovation at your own peril. Dedicating less than 0.6% of the total revenue of the media industry to the startup ecosystem will lead to stagnant growth, limited innovation, and scarcity where a few unicorns (Clubhouse, anyone?) suck up what capital is available while hundreds of promising media startups fight for table scraps.

COVID-19's impact on consumer behavior has shaken the media industry to its core and led to some innovation, including an explosion in OTT (over-the-top) streaming services chasing Netflix and Hulu. But we are going to need to invest much more if we expect the media industry to rise to the challenges ahead.

This is one reason Glen Nelson Center launched the Next Challenge for Media & Journalism. We may not have billions of dollars to invest (yet!) but we will connect the best and brightest media startups with industry leaders; help them hone their business plan and land new customers; and award $100k in cash prizes to the startups that will reinvent our industry in the coming decade.