By Allan Maurer
ATLANTA—Greg Foster, who joined Atlanta-based venture firm Noro-Moseley as a general partner in March, says the Southeast is ripe for digital media start-ups and the infrastructure companies that support them. “A lot of great consumer-facing digital media companies will emerge from the Southeast,” he says, “but I’m even more bullish on the infrastructure enablement plays.”
Foster is among more than 40 top Internet gurus who will speak at TechJournal South’s Internet Summit in Chapel Hill in November (for more information on the Summit see: www.internetsummitevent.com/).
Noro-Moseley, Foster points out, has already invested in several digital media infrastructure companies. They include Atlanta-based Clearleap, one of TechJournal South’s Tech 50 companies, which is building technology to deliver new Web video options.
Another is Motricity founder Jud Bowman’s latest company, PocketGear. PocketGear is a platform for mobile content and applications. Bowman will also appear at the TJS Internet Summit.
He also cites RTP-based Digitalsmiths, as a type of infrastructure firm he means. Digitalsmith’s VideoSense is the first broadband video ad-matching system to integrate seamlessly with existing online ad networks. Digitalsmiths CEO, Ben Weinberger, is yet another Summit speaker.
Foster sold his start up Southern Direct, which provided an e-commerce platform to cable networks, to Turner Broadcasting, where he served as VP of Corporate Development prior to joining Noro-Moseley.
Prior to that, he was with two other regional start ups, iXL and Silverpop. He says the fact that Noro-Moseley brought him on board indicates it is interested in investing further in the digital media and infrastructure sectors.
Southeast ripe for digital media firms
He says the Southeast is particularly ripe for entrepreneurs to develop digital media companies. “We have big companies such as Turner, Cox and the Weather Channel just in Atlanta,” he says.
“So with capital, the big companies here, and entrepreneurs interested in doing these types of things, we have something really interesting to build upon.”
For venture capitalists, he says, “Things get interesting when money starts to flow. Theories of disruption are fine, but what’s really interesting to VC firms is when real money flows from one place to another and proves disruption is really occurring.”
That’s happening with digital media now, he notes. “Ad dollars are flowing from traditional to digital media, including social networking and Web 2.0 sites and gaming. There’s a critical mass of dollars moving to digital media and a lot of businesses are taking advantage of that.
It’s a huge opportunity for start ups in the Southeast.”
Dollars flowing to online advertising
He cites numbers from Morgan Stanley that show newspaper ad growth fell 7 percent, classifieds another 14 percent, broadcast radio down 5 percent and radio down 3 percent year over year. Internet and online advertising on the other hand, grew 26 percent.
Cable TV, which has had double digit growth since the late 1970s grew only 6 percent, according to Morgan Stanley’s figures.
“So there is this huge wave of dollars coming online,” says Foster. Part of the reason for that, he says, is that the ad dollars are just beginning to become commensurate with the amount of time the average person spends online now.
The number of impressions is not fully monetized. “Advertisers are only starting to catch up with the reality that people are spending a lot of time online.”
Local news another opportunity
Foster admits that watching local newspapers struggling worries him because local news is likely to suffer.
“For all things daily papers do wrong, they’re still the last, best hope to keep people honest.” There may be a gap before some form of new media such as blogging takes up the gap that cutbacks in the newspaper industry may leave.
That could present another area of opportunity for start ups, Foster says.
“We’ve looked at some deals that have local advertising as their basic business model. We like that space. It’s highly inefficient, but a very large space, a $25 billion a year industry. Google has cleaned up selling local adsense advertising. So there’s a lot of money in that space.”
Foster says the current economic downturn certainly affects the ad business. “I’m not sure what the dollar spend online will be this year, but I wouldn’t be surprised if growth were stymied. Still, 2008 represents a significant increase over 2007, so we’re really talking about a cut in an increase. But there are a lot more people competing for those dollars.”
“One of my investment theories, and Noro-Moseley as a firm tends to think like this,” he says, “is that you want to invest in real solutions to real problems. That makes it easier for a business to make a decision about buying that solution, so that even in a downturn, you are somewhat protected.”
On the Web: www.noromoseley.com; www.clearleap.com; www.digitalsmiths.com; www.pocketgear.com/
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