Main Street Connect Raises $4 Million
Main Street Connect, a new hyperlocal network founded by former community newspaper executive Carll Tucker, former SmartReply exec John Falcone and others in the New York suburbs, notified the SEC on May 26 that it has raised $3.97 million for “working capital” from ten angel investors. The same form notes that the company will attempt to sell up to $10 million of equities. Paid Content reported on the SEC disclosure earlier today.
The high amount, and assumption of geographic concentration, would put the company in contention to compete against other ambitious hyperlocal efforts, such as AOL’s Patch.com, which is set to spend up to $50 million in 2010.
A twist to Main Street Connect’s model is its focus on annual visibility programs that raise awareness for local businesses in several ways, including banners, social media, etc. Part of its strategy is to sell local partnerships, or franchises. Its website notes that “Main Street Connect provides local partners all the tools, working capital, and guidance they require to build profitable high-quality community news sites.”
We previously reported that Main Street Connect has a core base of 25 full time — albeit virtual — staffers, including 11 editorial, six sales, four engineers and four administrators.
In other hyperlocal news, The U.S. Local News Network, which raised $3.18 million, is operating with reduced staff, and in need of new investment. USLNN had previously shut most of the operations of its its Orange County Local News edition, which had been partnered with The Los Angeles Times.
Given all this, the question in all this is whether conditions are now ripe for hyperlocal to work, or whether its scale and audience will always be too fragmented.
Besides Main Street Connect, Patch and USLNN, other competitors include Yahoo, which is hiring local news editors in a number of markets and just acquired Associated Content, an SEO-based content creator; other content creators, such as Demand Media and Examiner.com; local news aggregators such as Topix and Fwix; event aggregators and city guides such as Center’d, American Towns, Eventful and Zvents; and CMS-based systems such as Matchbin.
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Some indisputable facts are emerging in reference to hyper-local business models:
#1: Top down, expense heavy, centralized & proprietary models are either heavy in red ink, burning thru investor cash, or are folding.
#2: Editorial-first models (run by those with primarily an editorial background) are also struggling to ramp, burning thru cash, or are shutting down. While these efforts are succeeding in running very lean and cutting out alot of traditional costs, they lack critical emphasis & expertise in thier top line revenue efforts.
#3: A small handful of operators are getting traction by leading with a Revenue Management System (RMS) that supports online journalism…..as opposed to the current, common models: Content Management Systems (CMS) searching for revenue models, that will be retro-fitted into the CMS system.