The New Gatekeepers

Mic looking for investors amid cash woes

September 21, 2018, the one-time digital media star, has recently held two board meetings, including one last week, to discuss the need to find a strategic investor amid an urgent cash crash at the company, according to multiple people familiar with the conversations who say the possibility of a shutdown was part of the discussions.

In an email to CJR, a spokeswoman denied that there was an emergency board meeting, and said the company is not shutting down, but otherwise refused to comment. In a tweet, co-founder and CEO Chris Altchek said the notion of a shutdown was “categorically false.”

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One source who spoke with CJR says they were briefed on the meetings from multiple companies that share investors with Mic, who are said to be concerned about the future of their investment. The company has raised a total of $60 million in seven rounds of funding—the last round in 2017, which included Time Warner and Lightspeed Venture Partners, giving Mic a theoretical valuation in “the mid hundreds of millions,” according to reports at the time.

A second source close to the company says financial experts have raised questions about whether Mic’s revenue or traffic now justify anything close to that kind of valuation, since the site’s revenue is said to be flat at about $14 million a year, and traffic has fallen sharply. The Wall Street Journal reports that Mic has been discussing an acquisition offer “among other strategic options,” but even if the company were to get acquired at five times revenue—which would be a very aggressive multiple for a site where revenue is flat—Mic would barely be able to make back the money that has been invested so far.

In April, after a Digiday story said that Mic’s traffic had plummeted by more than 60 percent and the company was under severe financial pressure, Altchek told Recode that the company had the “best quarter in its history” in the first quarter of this year, was on track to hit a new revenue record in 2018, and that he expected to reach break-even status by 2019.

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Mic is just one of a number of former high-flying digital media companies that have come under financial pressure in the past year. BuzzFeed was forced to lay off about 100 people last year, after the company reportedly missed its revenue targets for 2017 by as much as 20 percent, and Mashable was acquired by Ziff Davis for less than $50 million, after multiple rounds of financing that had given it a theoretical valuation of $250 million.

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This story has been updated.

Mathew Ingram is CJR’s chief digital writer. Previously, he was a senior writer with Fortune magazine. He has written about the intersection between media and technology since the earliest days of the commercial internet. His writing has been published in the Washington Post and the Financial Times as well as by Reuters and Bloomberg.