Blue Wire, a podcasting company that primarily focuses on sports, has raised $2.5 million in funding.
East Carolina Angels and the Pirate Entrepreneurship Fund, both affiliated with East Carolina University, invested a total of $945,000. Kevin Jones, who founded Blue Wire in August 2018, graduated from East Carolina in 2011. Dot Capital, a venture capital firm in New York, invested $750,000, while also participating a group of angel investors.
Jones owns 50 percent of the company, which has 250 podcasts, including ones from former NFL player Chris Long, former NBA player Richard Jefferson, Miami Heat guard Duncan Robinson and Las Vegas Raiders guard Max Crosby.
Dot Capital, Blue Wire’s second-largest shareholder, has invested nearly $5 million of the $11.4 million Blue Wire has raised since its founding, according to Jones, the company’s CEO.
The latest investment came in the form of a convertible bond, meaning it was structured as a short-term loan with the intention of converting to equity in Blue Wire. The company would not disclose its valuation, but Jones said Blue Wire is in the market to raise additional capital to fund its growth plans.
Blue Wire is on track to generate $10.3 million in revenue this year, up from $4.8 million last year and $1 million two years ago, according to Jones. He added that the company’s podcasts are on track to have 124 million downloads this year, up from 60 million in 2021 and 16 million in 2020.
The company hopes to break even for the first time next year, when it predicts it will generate $23 million in revenue and have a total of 250 million downloads.
As venture capital funding dries up due to tough economic conditions, investors are becoming much more focused on profits than in previous years, Jones said.
“A lot of VCs are pulling out,” Jones said. “They just say, ‘It’s too risky now.'” People have to find different ways to raise money. I am proud to be associated with my alma mater, East Carolina.”
He added: “Kesia is stronger. They were a little looser in previous years, which was great for us. Everyone still has a match. If your company is growing fast and you have the metrics, you should be able to find a handful of people, but it’s getting harder. There are a lot more ‘Nos’ and the process will take entrepreneurs longer to raise capital, at least that’s what we’re facing.”
For Jones, even being in a position to launch and lead a fast-growing startup is more than he ever imagined. After graduating from college, Jones worked in the sports media industry for several years, including as a sports producer for television station WUSA in Washington, DC, a reporter for the Cleveland Browns website, and a digital content manager and San Francisco 49ers reporter for KNBR , San Francisco’s premier sports radio station.
Jones dreamed of one day hosting his own sports radio show in a major market, but became disillusioned with the lack of opportunity he saw in achieving that goal and working in a cutthroat industry. When he was let go from KNBR in August 2017, Jones started his own podcast, Striking Gold, where he discussed the 49ers.
The podcast attracted about 5,000 to 6,000 downloads per episode. But Jones was only making $2 to $3 CPM (cost per thousand impressions) when he uploaded the episodes to Audioboom, an audio distribution and podcasting platform.
Jones knew there were other niche podcasts making similar money, so in August 2018 he officially launched Blue Wire with the goal of creating a network of sports podcasts of major professional and college sports teams in the US
“I struggled as a journalist,” Jones said. “I had an Aha moment, ‘I can roll the dice as an entrepreneur. I think they’ll even respect me if Blue Wire doesn’t take off. At least I tried.’ We have somehow captured lightning in a bottle. To me, it’s all about relationships and building with people you enjoy building with. If you can hire the right people and choose the right content creators, it all comes down to that at the end of the day.”
Jones initially invested $17,000 of his own money to start Blue Wire. The company raised its first outside capital in May 2019, when 500 Startups, a venture capital firm and early-stage accelerator, invested $150,000. In August, Blue Wire hired its first employee besides Jones, bringing on Peter Moses, who had worked as producer in the Los Angeles area for about a decade. Moses is currently the company’s senior vice president of original stories and conversational podcasts.
In early 2020, just before the coronavirus pandemic began, Blue Wire raised $1.2 million in a seed round led by Dot Capital. The company raised more money last year than Dot Capital.
“I increased my investment because the company was able to meet its goals for downloads, revenue and expenses,” said Joseph Saviano, founder and managing partner of Dot Capital. “I am very pleased with the performance. I think they’ve realized how to capitalize on finding new, interesting talent that is relevant to a younger audience. This means a huge increase in listens, downloads and ads.”
Blue Wire has maintained its roots of signing deals with podcasters who focus on specific teams in the NFL, NBA and other sports. But it also offers podcasts in other areas like business, chess, and Dungeons & Dragons, and in the last year or so has expanded to partner with famous former and current athletes like Long and Jefferson.
As part of the WynnBET deal, Blue Wire licenses Long’s popular podcast Green Light, co-produces the podcast with Long’s company Chalk Media, and assists with ad sales and other business and operational functions.
In January, Blue Wire inked deals to handle sales, marketing and production for “Road Trippin’,” a podcast hosted by Jefferson and former NBA player Channing Frye, and “The Long Shot,” hosted by Robinson. Jones said athletes find Blue Wire an attractive partner because of the company’s reach and the fact that Blue Wire doesn’t own or operate the podcasts, giving them the freedom to speak freely and retain their intellectual property.
“We want (Long) to be himself,” Jones said. “Richard Jefferson is the same way. He is enterprising. He wants to tell his own stories without any filter. But they need a partner to sell ads, they need production, marketing. How to help grow the audience? They could take all this content to ESPN, but then they put it in this machine, they have to say this, promote this on the podcast. Athletes want to keep their digital content. It’s like church and state. You want to keep it separate from the larger entities. They want to own it and plug it into somewhere like Blue Wire. More and more athletes see the future in this.”
Blue Wire generates about 75% of its revenue through advertising, with podcasters sharing ad revenue based on the number of downloads they receive and other metrics. Self-employed podcasters typically use programmatic ad sales, where a third party manages the process of automatically buying and selling ads, resulting in low CPMs. But Blue Wire’s sales staff is able to use the company’s reach to make more lucrative deals with advertisers, which benefits individual podcasters, according to Jones. Blue Wire has worked with more than 50 advertisers this year alone.
“I try to make the experience as great as possible for podcasters,” Jones said. “They get a clear receipt from us at the end of every month, here’s your payout, here’s why, here’s the ad campaigns you’ve been on. Everything that was wrong with the industry four years ago for me, I’m trying to fix.
The remaining 25% of Blue Wire’s revenue comes through other avenues, such as licensing agreements and working with brands, including Mountain Dew, on their company podcasts. The company also works with YouTube and TikTok influencers.
The podcasting industry has some business success stories among startups, most notably with Spotify paying $230 million in 2019 for Gimlet Media and $250 million in 2020 for The Ringer, which was founded by the popular former personality of ESPN Bill Simmons. Gimlet is perhaps the only podcasting content publishing company to raise a Series B round, while others were launched with less capital or without the help of the VC community.
“(The podcast industry) is so new that some venture capitalists can’t see huge exits because they haven’t happened,” Jones said. “I think it’s a narrative. All entrepreneurs are going to struggle with some kind of narrative right now, but the podcasting narrative is, “There haven’t been many venture-scale businesses. Why you?’
Down the road, Jones envisions media companies, radio conglomerates, sports gambling operators and streaming platforms from above as potential buyers of podcasting companies like Blue Wire. But for now, Blue Wire is focused on continuing its growth and focusing on the bottom line.
“I saw the tech bubble burst in 1999, 2000,” said Saviano, who has worked in venture capital and private equity since the early 1990s. “It becomes similar to when all the VCs and everybody in the world tells their companies to get to profitability as quickly as possible…We’ve never raised a huge round and we’ve never had a big burn rate, so we’re in a good position to manage during this phase.’