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Bloomberg LP to test venture capital waters again

Bloomberg LP to test venture capital waters again
Bloomberg LP is expected to launch a $75 million venture capital fund providing the financial information outlet with a window to the fast growing world of start-ups.

The fund will be headed by Roy Bahat, former president of IGN, an online gaming news site owned by NewsCorp.

Called Bloomberg Beta it will operate as a separate legal entity from Bloomberg LP, and will be based in San Francisco.

Bloomberg Beta will invest in early stage start-ups (Series A) as well as seed investment, but can also internally foster projects. The fund will use parent company Bloomberg LP’s fund to offer investments on nebulous start-ups, and VentureBeat reported it has already invested in start-ups Newsle, Nodejitsu, Codecademy, Errplane, and ProsperWorks.

Codecademy, is a web site that provides online coding tutorials, and Newsle is a web service launched by Harvard grads which compiles news activity in social media circles.

In the last month, the company has almost doubled its programming hours for Bloomberg West, the technology branch which reports on smartphones, cars, cyber security, and of course, start-ups. Many of Bloomberg’s technology reporters are based in San Francisco.

The independent venture will focus on start-ups that are "producing insights from data" and "making the experience of work better," according to a news release, reported by VentureBeat.

Beta’s critics fear the cozy (and monetary) connection will give Bloomberg an advantage in its reporting, because start-ups could see investment as a free press pass.

A Bloomberg terminal displays news while traders work on the floor of the New York Stock Exchange, May 16, 2013. (Reuters / Brendan McDermid)

Bahat said Bloomberg News, will follow existing protocol on relationships between companies and journalists, which forbids the company to cover itself out of self-interest.

“If an entrepreneur wants Bloomberg Beta’s money because they think they’ll have a higher chance of getting covered by a Bloomberg journalist, then they shouldn’t take our money,” Mr. Bahat said on Tuesday.

“We were set up to have confidentiality protections, and we will only share when appropriate.”

An industry leader in financial information, Bloomberg was accused of ‘snooping’ when a Goldman Sachs employee came forward with a complaint the company authorized excessive surveillance of customers through its data terminal.

The New York Times Company has invested in some technology start-ups, and like Bloomberg, cite disclaimers when reporting on firms in which it has an interest.  NYT Co lists the websites on their website and has a stake in Wordpress.com, a blogging website,  Brightcove, an online video platform, and seven others.

Recently Bloomberg ran Bloomberg Ventures, a similar venture capital project which helped incubate news businesses that could later be made into Bloomberg products. The investment vehicle is not currently operating.

Karin Klein, a Bloomberg executive, and James Cham, from Trinity Ventures, will join as partners on the Beta fund.