Notes from Chilecon Valley

In Latin America, the money may be in the media startups

When the news blows up in Mexico City, Dulce Ramos is on the case. She is editor in chief of Animal Politico, a digital media startup that began as a Twitter account. In a country known for “disappearing” reporters who look too closely at drug cartels and government corruption, Ramos, 33, feels that it’s her duty to cover stories that are being ignored by mainstream news outlets.

“We cover stories that make our readers outrage[d],” she said. “We also try to bring them hopeful stories, [about] successful citizens’ efforts to change their communities. [These are] issues mainly pushed aside by mainstream media.”

Animal Politico grew out of a Twitter account created in November 2010. A year later, the website launched with the backing of Colombian investors Daniel Eilemberg and Isaac Lee, who now work at Fusión and Univisión, respectively. Ramos said that the website’s audience is “young, educated, tech-driven Mexicans [who] use social media to keep themselves informed,” and that 60 percent of their audience accesses their stories through social media. Last month, Animal Politico reached 4 million unique views, and Eilemberg has said that he expects it to achieve profitability this year.

Animal Politico isn’t operating in a vacuum. A convergence of shifting demographics, the news environment, increasing internet penetration, and the relative safety digital media provides are reasons that Latin American media startups are on the rise.

Young adults in Latin America spend an average of seven hours online daily, the same amount as their US counterparts, according to a survey conducted last year by Telefonica and the Financial Times. That survey also showed that 45 percent of Latin America’s millennials—a demographic coveted by advertisers like in the US—believe digital media offers the most credible news coverage, more than trust television or print news.

Furthermore, digital media provides something of an escape from the dangers of censorship and physical threat that face some print reporters in the region. Press freedom in Latin America is at its lowest point in the past five years, according to Freedom House’s 2014 Freedom of the Press Index. But internet use there is on the rise, outpacing the rest of the globe, and, points out James Breiner, a journalist who tracks digital media developments in Latin America via the blog News Entrepreneurs, it’s often easier for governments to censor print media than digital media.

“It is more complicated to block a digital media site. The government has to somehow have control over the company that has the servers,” he said. In Venezuela, for example, the government owns a monopoly on newsprint, effectively controlling the media’s right to print a story, he explained.

Though some startups are rapidly growing, like—an Argentinian website that models itself after BuzzFeed, covering news, entertainment, and pop culture—others are focusing on more local issues and simply trying to sustain themselves. Many of these new sites, big and small, owe their existence at least partly to Breiner. Four years ago, he moved to Guadalajara, Mexico, as a Knight International Journalism Fellow to create a center that would provide Latin American journalists tools for success in the digital era. “There was a big need for training Latin American journalists in digital media schemes,” Breiner explained. “There was tremendous demand for these skills.” Many trainees have since gone on to launch sites.

One such trainee, Cesar Angulo, runs an ecology-focused news website in Northwest Mexico, “He’s providing coverage of ecological issues that no one else is doing,” Breiner said of his reporting.

Another trainee, Emma Amador, runs several websites, one of which is an investigative news blog in Nicaragua that focuses on local issues. Amador wanted to pursue digital media because she didn’t feel print news was lucrative and she was interested in the burgeoning culture of online journalism, she said in an email. She also felt more free to pursue controversial stories online than she did in print.

“The majority of the themes that are… published on my blog are controversial,” Amador said. “[I] touch on issues that not every journalist wants to take on, such as political issues, corruption, gender, gender violence, and other issues that are at odds with the double moral standards of current society.” Digital media, she added, “offers the possibility of publishing [under] covert identities.”

Breiner described Amador as a motivated student in his program. “She was a veteran journalist, and she was doing service to her community and her country,” he said.

Breiner isn’t the only person realizing there’s money to be made from getting involved with Latin American media startups. NXTP Labs, a group that invests in Spanish-speaking technology startups, is funding some digital media sites. Ariel Arrieta, co-founder of NXTP Labs, wrote an article last year for VentureBeat in which he argued that the environment is ripe for investment.

“The market conditions in Latin America are improving, while the rest of the world remains stagnant or on the decline,” Arrieta writes. According to Arrieta, half of the top 10 worldwide markets with the highest social media usage are in Latin America. “This, coupled with a very young population, has set up a prosperous climate for technology startups to spring up in the area,” Arrieta continues. Arrieta plans to cash in on this “prosperous climate,” by offering startups $25,000 in seed money in exchange for what NXTP Labs calls “a minority stake,” between 2 percent and 10 percent.

While NXTP Labs is funding startups of all kinds, Media Factory, the brainchild of another Knight Fellow, Mariano Blejman, focuses exclusively on media startups. “Media Factory is a news accelerator,” Blejman explained. “We see an opportunity of investment in an emerging community of people [who are] growing very fast and trying to make a change.” Blejman doesn’t just think investing in digital media is important; he thinks it’s smart. In an interview at the University of Texas, Blejman explained that media startups are both cheaper than most tech startups to run, and it’s easier to measure their success.

Since launching in January, Media Factory has selected three news projects to fund: El Cambur, a Venezuelan news startup that provides a daily bulletin on international and domestic news; GKillCity, an Ecuadorian “counter-cultural citizen’s communication project” that provides a more alternative look at news and culture; and, the rapidly growing Argentinian BuzzFeed lookalike. Media Factory will provide each startup with training in digital media and $75,000.

NXTP Labs and Media Factory are looking for the big-hitters: digital media sites that are growing rapidly and will continue to do so. But these startups only make up a fraction of the overall digital media boom in Latin America. “You’re talking about a very small subset of digital media,” Breiner explained. “Maybe one percent of digital media would be of any interest to a venture capitalist.” For smaller startups, like those run by Amador and Angulo, funding is a bit harder to find.

Amador has been able to sustain her website in the four years since she attended Breiner’s workshops, but she said it has been hard. “Financing a blog is not easy, due to the fact that in my country, Nicaragua, it is not in the culture of private enterprise, civil organizations, and the state to advertise their products this way,” Amador said. Yet she has been able to secure funding from some government entities and international organizations. Since founding her websites in 2004 and 2010, all have grown, with over 200,000 followers each.

Angulo has also secured sponsorships from a few local companies, which have helped his site survive. Startups like these can also appeal to banks, universities, or telecom companies. A few are funded through national government initiatives like Start-Up Chile, which invests in tech startups and some digital media.

Still, such initiatives focus their funding more on tech than media—Start-Up Chile is only funding one media startup, and of the five fields NXTP Labs says they focus on, media and entertainment are grouped together as one. LatAm Startups, a group trying to promote entrepreneurship in Latin America, isn’t funding any media startups. “Media startups…so far as we can tell, are pretty much nonexistent,” Jens Porup, a representative for the group, said in an email to CJR. Rockstart Accelerator, an investment group in the Netherlands with a Latin America initiative, isn’t funding anything media-related; instead they’ve chosen to fund health, sustainability, education, and transportation startups.

Yet the Latin American online market provides a unique opportunity for digital media startups, and those who want to invest in them. A growing population in the region is distrustful of the oft-censored mainstream news outlets, and internet penetration is only growing. Furthermore, Latin American media startups have the potential to incorporate readers in the United States, where the Spanish-speaking population continues to increase.

Amador, for one, is confident digital media will prevail. “Although subject to censorship too, it is more likely to survive, and have more coverage,” she said. After all, “the internet is global.”

Emma Amador’s words were translated from Spanish by Hillary Mercedes.

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Fiona Lowenstein is a CJR intern.