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VCs Put $25M on the Waterfront
Red Herring
By Ken Schachter
September 25, 2007 In a bid to bolster its sales force and acquisition war chest, Waterfront Media, a web network of diet and health sites, has raised $25 million in its fourth round of funding, the company announced Wednesday. Scale Venture Partners led the round and was joined by Foundation Capital, a new investor. Also taking part were prior investors Rho Ventures, Time Warner Ventures, BEV Capital and Neocarta Ventures. Waterfront Media’s Everyday Health Network climbed to the No. 2 slot in the Media Metrix ranking of top health web sites in June. Its 9 million unique visitors put it behind WebMD Health (17.1 million), but ahead of MSN Health and Yahoo Health, in third and fourth places, respectively. Executives and venture capitalists figure that traffic can be turned into revenue given the pharmaceutical industry’s appetite for hot leads. "Pharma pays a much higher price per thousand than any other vertical," said Sharon Wienbar, a managing director of Scale Venture Partners and a new member of the Waterfront Media board of directors. While in television and print ads, pharmaceutical companies must pay for the disclaimers that accompany their advertising, on the web it’s free, she said. "It’s the old joke: Half my ad budget is wasted—I just don’t know which half." Everyday Health offers advice and community on a broad range of health issues, but it also maintains a network of satellite subscription sites, including the South Beach Diet, exercise plans from gurus Jillian Michaels and Denise Austin, What to Expect Pregnancy Club, and Dr. Laura Berman’s Passion Prescription. "A good chunk of their revenue is those diets," Ms. Wienbar said, noting the company seeks to insulate itself from faddish swings by issuing five to 10 new diet sites each year. Benjamin Wolin, who co-founded the company based in the Dumbo (Down Under the Manhattan Bridge Overpass) section of Brooklyn, said potential M&A targets come in two categories: those that will improve content and those that will increase viewership. Mr. Wolin said the 150-person company plans to increase its 25-person sales force by 75-100 percent within a year. All told, the company has raised $37 million in venture capital and Mr. Wolin said this is likely its final round.
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