viralnova - youtube video
JStuStudios/YouTube

Zealot, headed by ex-Maker CEO Danny Zappin, plans to use social publisher to scale up audience reach

Zealot Networks, the digital media company formed by ex-Maker Studios CEO Danny Zappin, has acquired socially-driven content publisher ViralNova in a deal that could be worth upwards of $100 million.

The acquisition — by far Zealot’s biggest to date — will let the company rapidly build an online audience for its current and future original content, Zappin said. ViralNova specializes in harvesting “inspiring and emotionally striking” video and other content from YouTube and other sites, angling to get visitors to share its posts and listicles on social media, similar to BuzzFeed, Daily Mail-owned Elite Daily, Likes.com and Upworthy.

Founded last year, Zealot has acquired or taken a majority stake in 15 smaller media, marketing, production and talent-management firms, including YouTube music-licensing firm AudioRev and talent agency Converge Media Group.

“We want to build on the audience component, and we see ViralNova as an anchor to grow that,” Zappin said. “The next phase for us is to take what the creative companies in our portfolio do and put it through a network and monetize it.”

The deal for ViralNova is split roughly 50-50 between cash and equity, with the $100 million figure depending on the site hitting performance targets and whether Zealot’s valuation increases. 

Zealot has announced more than $30 million raised from investors including U.K. broadcaster ITV, Venture51, Accelerate-IT Ventures and several current and former employees of Maker Studios. The company recently secured debt financing from Breakwater Investment Management to fund acquisitions; Zealot disclosed in a July 7 filing with the SEC a $26.5 million transaction for additional debt and equity funding.

The New York-based startup, which launched in May 2013, claims to be profitable and that it’s on track to top $35 million in revenue this year. ViralNova has a large following on Facebook, its biggest referral site, with 2.4 million fans (although it has only 10,300 on Twitter). CEO Sean Beckner said the startup is fully self-funded and has turned down offers from outside investors.

In May 2015, ViralNova had 17.6 million unique U.S. visitors, compared with 74.7 million for BuzzFeed, according to comScore. In addition to driving audience, ViralNova will give Zealot digital publishing tools — including proprietary systems for content management, content discovery and trend identification — to launch new properties, Zappin said. He added that Zealot will focus original video content in two main vertical segments: food, lifestyle and travel; and music and entertainment.

Between 30% and 50% of ViralNova’s content on any given day comprises videos, with more than 90% of those historically from YouTube, according to Beckner. Increasingly, he said, the company is producing its own original content instead of curating from other sites. ViralNova’s core demographic is people 25-45, skewing slightly female, but Beckner said the user base spans all demos. “We have a pretty good range of readers,” he said.

Recent video posts on ViralNova include an item about “Dog in the Drive Thru!” (pictured above) from YouTube channel JStuStudios; “Meet the Only Two People in the World Who Don’t Know How to Use a Frisbee”; and “What This Guy Did with Some Electrical Tape and a Taser Is Insane… But Also Awesome.”

ViralNova, which has 24 staffers, will remain based in midtown Manhattan. With latest acquisition, Venice, Calif.-based Zealot now has nearly 250 employees.

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