Hearst Ventures’ Darcy Frisch spoke to reporter Robin Brinkworth about competition, diversification and AI.
Hearst Ventures, where Darcy Frisch is managing director and vice-president, is the corporate venture capital (CVC) unit for Hearst – originally a publishing company but now billing itself as a media, information and services company with more than 360 businesses under its umbrella.
The unit’s mission is, as Frisch put it, to make “investments for financial return and strategic insight about technologies and industries that matter to the Hearst corporation”. Frisch defined success as delivering financial return or useful knowledge, and ideally both, whereas some strategic units may say that strategic return goes beyond “useful knowledge”, and involves direct interaction with business units.
Investing from Hearst’s balance sheet, Frisch said the unit had been investing since 1995, making it a good deal older than many other CVCs. The result is that Frisch and others in her team had “healthy networks of entrepreneurs and co-investors that are excellent sources of new opportunities”.
Frisch’s other major interactions are with the core business units of Hearst. The investment committee includes senior management from the operating divisions, which keeps the investment and business sides closely entwined. The investment team can leverage “the valuable knowledge” of their colleagues, while interacting with them “on a regular cadence to understand what matters to them, and how our portfolio could partner them”.
Frisch acknowledged the competition across the sector, saying: “Venture investing is a competitive business, increasingly so with the amount of new capital flowing into the sector.” While she did not think Hearst faced more or less competition than any other venture group, she also did not highlight Hearst’s strengths, saying simply that Hearst Ventures had been committed to ensuring value-add for its portfolio companies since its inception.
Hearst Ventures was set up as the dot.com boom began to mount. Frisch said: “It was initially focused exclusively on digital media businesses.” Now the unit also invested in sectors “beyond media”, with Frisch seeing it as a “natural evolution” that mirrored the corporation’s “expansion beyond consumer-facing media opportunities”.
Hearst Ventures’ parent now operates multiple business-focused media companies, and the venture team runs in tandem. Frisch said: “Current sectors of focus include transportation and logistics, real estate and insurance technology, and subscription-based consumer applications and services.”
While Hearst still has investments in media publications and the services around them, such as digital media company Buzzfeed and social media scheduling tool Hootsuite, it has spread its net to include a much broader array of companies, such as delivery specialist FlashEx or inventory management software provider Systum.
That diversification is unsurprising. While Hearst made the change years ago, investment in media properties has been under pressure for some time. Corey Ford’s media-focused venture fund is no longer investing, and others are betting that venture units will increasingly steer clear of publications.
Hearst’s diversification has opened up new avenues of technology for Hearst Ventures to explore. Frisch is particularly excited by artificial intelligence. “It is not earth-shattering to say AI will drive technological change across every industry. In the same way new businesses and business models were built on the web, mobile and cloud, I believe we will see AI as the foundation for the most exciting tech opportunities ahead of us.”
Asked about her favourite deal or startup, Frisch said: “Out of respect to my portfolio companies, I would rather not single one out over another. I don’t have a favourite child, either.”
Her enthusiasm is not unmitigated though, as she warned: “The term AI can be misused and misunderstood. Sometimes I sense that technology is being hyped as AI, when in fact it is not AI at all.”
Frisch is currently focused on transport, looking at technologies that make moving around more efficient, greener and safer. “As individuals, enterprises and municipalities make choices about mobility and transit, tech that enables sharing, connectivity and electrification are interesting to me.”
As she focuses on transportation, the Hearst team of eight will continue its global investment focus. Hearst Ventures, like many other units, invests in China, Europe, Israel and the US, focusing on those geographies due to “market size, technological innovation, and the relevance of the market to Hearst’s 360-plus global businesses”.