In most of the startup world, capital is everything. It costs money to build an institution and sustain its growth until the point that revenues can match (and then, hopefully, exceed) expenses. But there’s very little capital in the world of local journalism startups. National brands such as Patch or Journatic that seek to bring scale and efficiency to local news can get funding, but entrepreneurs who want to focus specifically on their city or state are far less likely to attract investors. Some of the reasons for this lack of investment are obvious: Venture capital firms, for example, typically focus on businesses with potential for high-margins and rapid scalability—criteria diametrically opposed to the mission of many local news entrepreneurs. The reasons for the lack of other forms of financing are less clear: Why, despite the continued woes of the legacy media, haven’t angel investors swooped in to fund new types of journalism in their communities?

After studying nearly 300 digital news ventures for CJR’s Guide to Online News Startups, I can think of exactly three for-profits devoted to local or state-level news that received substantial capital investments: Alaska Dispatch, which is backed by former US News and World Report CFO Alice Rogoff; The Civil Beat in Honolulu, which is backed entirely by founder Pierre Omidyar’s foundation; and This Land Press in Oklahoma, which has so far received a $1.3 million investment from Tulsa-based venture capitalist Vincent Lovoi. I profiled This Land for CJR’s recent cover package on “The future of media (this minute, at least)”, calling the two-year-old outlet, “perhaps the best for-profit local journalism startup in the country.”

A few weeks ago, I got on the phone with LoVoi and Rogoff to discuss their decisions to invest in local media, the particularities of their respective business models, and their theories as to why investors have yet to back local news in large numbers.

You can listen to the entire 24-minute interview here. Among the highlights of our conversation:

LoVoi pointed out that capital was a crucial part of This Land’s (so far highly successful) business strategy, because it enabled the most revenue opportunities without a commensurate increase in costs. “When we looked at it, it became very clear the most aggressive model had the highest likelihood of success,” he said. If LoVoi is right (and Rogoff thinks he is) then a lot of startups pursuing a more incremental strategy might want to spend more time seeking investors.

For her part, Rogoff feels that the news business will eventually transition quite nicely to the digital realm, business model and all.

The journalism industry “is no different in a macro sense from what happens whenever a business cycle gets to a low point in any particular industry,” she said. “If you look, for example, in some of the worst moments in real estate markets, you will find that values, eventually, have come back. What has changed is who owns them. You wind up flushing out players but not flushing out the concepts. And I really do believe that if you fast forward from today another 10 years or so, you will find that there will be the same aggregate number of ad dollars and eyeballs reading and paying for news as there were 20 years ago. But who is sitting in the middle of those revenue streams will be entirely different.”

Score one for media optimism. Listen to the entire conversation here.

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Michael Meyer is a CJR staff writer. Follow him on Twitter at @mcm_nm.