VANCOUVER — A B.C.-based digital-news startup co-founded by tech entrepreneur Andrew Wilkinson has been looking to raise $5 million in venture capital at a $25-million valuation to help fund an aggressive North American expansion plan.

“There is a billion-dollar monopoly opportunity lurking in local news,” reads Overstory Media Group’s (OMG) pitch deck, a copy of which The Logic obtained.  

Wilkinson and Farhan Mohamed, former editor-in-chief of the Daily Hive, founded OMG in 2020. It operates a dozen media brands which focus mostly on local news, with an emphasis on email newsletters. Those brands include its flagship outlet, Victoria-based Capital Daily, as well as Vancouver Tech Journal, the Calgary Citizen and Halifax alternative weekly The Coast, which it acquired in April for an undisclosed amount. The company says it employs nearly 50 full-time staff, and it claims Capital Daily is profitable and has over 55,000 subscribers. It has active job postings for “business writer/editor” positions in Calgary, Edmonton, Saskatchewan, Victoria and Winnipeg. 

The company now hopes to replicate its model in more than 30 North American markets, acquiring “struggling legacy publications and emerging new media brands,” according to the pitch deck. 

Media incumbents are “on life support,” OMG’s pitch reads, focused on big cities and national markets, and unable to make “compelling digital news products.” The pitch deck also highlights the modest financial resources of North America’s independent publishers, claiming they spend little on acquiring new readers and that 40 per cent of them operate on “$40k or less.” OMG proposes a focus on small- and mid-sized markets with populations of 50,000 to 500,000, where it can hire a few journalists, publish stories and build a suite of newsletters, including some about specific aspects of life in that town, like real estate or foods. “These local markets are wide open and we intend to take them,” reads the deck.

Wilkinson is best known as co-founder of tech holding company Tiny Capital, which he launched after “a miserable experience” with private-equity and venture-capital investors interested in businesses he started. Tiny is OMG’s majority shareholder. According to its website, it has founded 11 companies and holds a majority or minority stake in more than 100 firms with a combined enterprise value of more than $1 billion. Notable among them is WeCommerce, a business aiming to “start, buy and invest” in Shopify businesses, which Wilkinson took public on the TSX Venture Exchange. (Tiny is also an investor in The Logic.) Mohamed, meanwhile, spent more than seven years at Vancouver-based outlet the Daily Hive, starting there when it was still called Vancity Buzz. He helped the local blog expand to multiple Canadian and U.S. cities, and grow to employ 20 full-time staff.

OMG declined to answer The Logic’s questions about its fundraising and expansion plans. “Our goal is to continue having an impact in communities across Canada and beyond through sustainable and profitable independent journalism publications,” Mohamed wrote in an email.

OMG’s expansion plans come as Canada’s Liberal government is reshaping the workings of a media industry “in crisis.” Its controversial Bill C-18, currently working its way through parliament, would make large digital companies like Facebook and Google pay news publishers for links to news posted on their platforms.

The country’s traditional news publishers support the bill, but it has faced pushback from Big Tech. Emerging publishers including OMG want changes to the bill, arguing it isn’t fair to smaller outlets. 

In its pitch to prospective potential investors, OMG emphasizes the importance of government support to its business model. “The government is our silent partner,” reads its pitch, noting the government covers 25 per cent of the salaries the company pays its journalists. The government subsidy is the result of OMG’s status as a qualified Canadian journalism organization—a designation the government gives to news outlets that meet a set of criteria, including publishing original news content. These organizations can apply for a tax credit that offers a credit of up to $13,750, or 25 per cent of salaries for each eligible newsroom employee. (The Logic is also a qualified organization.)

The government subsidy is part of OMG’s pitch that “with a fraction of the revenue, we can have 30 per cent old school newspaper margins.” Calling itself “Chipotle for news,” a reference to the speed at which the American fast-food chain’s new locations turn a profit, it claims an investment of $350,000 will pay back in three years. That’s thanks in part to its operations costing less than those of legacy publishers, including an “all-digital approach,” no physical newsrooms and no unions.

Half of its anticipated earnings will come from ads, the pitch reads. Its next biggest moneymaker—30 per cent of revenue—will come from paid subscriptions, followed by much smaller—five per cent of revenue each—gains from a job board, events calendar, brand collaborations and local events. 

Using this model, OMG says Capital Daily netted a small profit on just over $500,000 in revenue in 2021–22. It will bring in nearly $2 million in revenue in 2024–25 and more than $500,000 in profit, according to the company’s projections.

With expansion to 50 communities by 2028–29, OMG projects $35 million in revenue and earnings before interest, taxes, depreciation and amortization surpassing $10 million.

OMG isn’t the only digital upstart looking to make money on local news via scale. In the U.S., national publisher Axios has launched a series of newsletter-based local news products, as has 6AM City. Both have focused more on larger cities so far.

It’s not clear when OMG started its fundraising efforts, but given that the deck does not list The Coast among its properties, it may date from before the late April announcement of that acquisition. It has come at a difficult time in the markets. Venture capitalists have been “preparing for a storm” amid economic uncertainty with Russia’s war in Ukraine, rising inflation and multiple interest-rate hikes. Some founders have found it more difficult to raise funds in the current environment. The Canadian Venture Capital and Private Equity Association expects a slowdown this year and more companies turning to venture-backed debt. Media companies in particular have struggled. One recent bright spot, however, was U.S.-based newsletter company Ankler Media, which this week announced a US$1.5-million seed round at a US$20-million valuation.