Berkeleyside announced today that it has raised $1 million in capital from 355 of its readers, making it the first news site in the country to do a successful Direct Public Offering.
The success of the DPO, which closed today, testifies to Berkeleyside readers’ belief in the need for high-quality independent local journalism in their community.
“While Berkeleyside could have chased investment from more traditional financiers, there was something symbolically compelling about giving readers the opportunity to have a direct role in the site’s future,” Nieman Lab reported in October 2016, when Berkeleyside launched its DPO.
The funds have already enabled Berkeleyside, founded in 2009 by three veteran journalists, to make the site mobile friendly, hire an additional reporter, and augment its events and membership programs.
While the additional capital will allow Berkeleyside to expand its award-winning journalism, the successful DPO also provides a model for sustainability for other news sites.
Local news around the U.S. is in peril, but Berkeleyside’s DPO shows that small sites can raise the capital they need to succeed from within their very own communities. Already, Berkeleyside has helped guide a Sonoma County-based newspaper group, Sonoma West, that has recently gotten permission from California regulators to launch its own DPO.
A DPO is similar to an initial public offering (IPO) in that securities, such as stock or debt, are sold to investors. Unlike an IPO, those securities are sold directly to investors rather than through an investment bank or broker-dealer.
“We are excited that news sites now have a new model to raise funds to give them a solid foundation to build a long-term future,” said Lance Knobel, Berkeleyside’s publisher. “In this time of diminishing local news — as well as regular attacks on the importance of news — a DPO can allow a small organization to set its own course.”
Many Berkeley residents said they invested in Berkeleyside because they value reading about their own community and getting information that is not readily available from other news organizations.
“The notion of free journalism is simply not sustainable, and if Berkeleyside is something we value then we should show that with our support,” said Michael Pollan, author, journalist and professor of journalism at the UC Berkeley Graduate School of Journalism. Pollan said he reads Berkeleyside every day.
The Lenfest Institute for Journalism named the news site among its first class of innovation grantees and will assist in the publication and distribution of best practices to help other news sites pursue a similar model.
“The Lenfest Institute is dedicated to promoting new business models to sustain the future of local news,” said Jim Friedlich, the executive director. “We are impressed by the results of Berkeleyside’s DPO and eager to share this success with other news organizations.”
In addition to the 355 investors, more than 1,100 people are Berkeleyside members. Most of them contribute anything from $5 to $25 a month to the site, which publishes five to 10 stories a day about issues in Berkeley and the East Bay.
Berkeleyside’s next major project, in addition to continuing to enhance its coverage, is to expand its membership program.