April 5 (Bloomberg) -- Business Insider Inc., the news site co-founded by former Internet analyst Henry Blodget, raised $5 million in venture capital from investors led by Amazon.com Inc. Chief Executive Officer Jeff Bezos.
Bezos, an avid reader of the site, is making his first investment in the company through his personal investment arm Bezos Expeditions and brings the startup’s total funding to $18.3 million, Business Insider said. RRE Ventures and Institutional Venture Partners also participated in the funding round. Earlier investors have included venture capitalist Marc Andreessen and Ken Lerer, a co-founder of the Huffington Post.
“Jeff’s leadership, vision and philosophy at Amazon have been an inspiration to a whole generation of startups and entrepreneurs, including me,” Blodget said in an interview. “It is a privilege and pleasure to have him invest in the company.”
The New York-based company had about $10 million in sales last year and a net loss of $3 million, according to a person with direct knowledge of its finances. Business Insider has about 100 employees and is expected to bring in more than $15 million in revenue this year, though it may not reach profitability, said the person, who asked not to be named because the information is confidential.
The 47-year-old Blodget, the subject of a recent New Yorker profile by author Ken Auletta, was barred from working on Wall Street after he settled claims with the Securities and Exchange Commission in 2003. The year before, Eliot Spitzer, then the attorney general of New York, accused Blodget of publishing “buy” and “sell” ratings on stocks to help win investment-banking business.
“Ten years ago, I got what amounted to a dishonorable discharge from the industry, and I’ve always been ashamed of that,” he told Auletta. “At some point, if it seems appropriate, I would like to explore the possibility of being reinstated.”
In 2007, he helped start Business Insider, known for its slide shows and quick takes on news.
The site draws around 24 million monthly readers and its coverage ranges from finance to technology to entertainment, with headlines like “Facebook Just Destroyed Google’s Android Strategy” and “The 28 Most Beautiful Photos Of Tiger Woods Playing Golf.” Its staff choses topics based on real-time data about what readers are clicking on.
Bezos, 49, started Seattle-based Amazon in 1994 and built it into the world’s largest online retailer. He is the 21st richest person in the world, with a net worth of $24.2 billion, according to data compiled by Bloomberg Billionaires.
As an analyst, first at Oppenheimer & Co. and later at Merrill Lynch & Co., Blodget gained fame for his bullish stance on Amazon. In December 1998, much of Wall Street had a negative view of the e-commerce company, which was then trading at $240 a share. Saying that “Amazon’s valuation is clearly more art than science,” Blodget set a one-year price target of $400. The figure was laughable to many on Wall Street -- until three weeks later, when the stock soared past that mark.
To avoid the appearance of favoritism at Business Insider, the site will regularly disclose Bezos’s investment when writing about his company, Blodget said.
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