Decision Day Looms for NESTA on Hyperlocal

The video presentations for the Destination Local funding by NESTA have now been published on YouTube. There are 165 organisations hoping for a grant of £50,000 to help develop a hyperlocal mobile phone application. My brother in law’s firm is one of the bidders and as the area is new to him and he was aware I had an interest in hyperlocal he asked me for an opinion on his chances.

Having scanned about 25 of the 2 minute videos a very clear pattern started to emerge so I stopped watching them. None of the ones I have seen seemed particularly compelling so NESTA have a tough task ahead although it should be said the real meat of the proposals will be in the written submission rather than the videos.

The bidders divided up into three very distinct categories:

1) Tech specialist – All the slicker and more coherent ideas came from this group. They all knew how to put together a good presentation and communicate their ideas well. The problem was that they were all variations on the same theme and not that different from stuff that was already out there. The quality of many of these presentations may just indicate that they are sloppy seconds from ones that have been previously made to venture capitalists who decided to invest elsewhere.

2) Old school hyperlocal – These seemed to be basically a plea to ‘help us make our site go mobile because we help the co-mmunity’. We are being asked to believe that having failed to make a commercial success of a web based operation they suddenly become worth backing in a different sphere were monetisation is even more difficult and the potential audience is smaller. There is a danger in this sector that sustainability becomes defined as  the person running the site being unemployable therefore there is no chance they will jack it in and they can present themselves as having purer motivations than nasty commercialism.

3) Subsidy junkies – There was a surprisingly high proportion of bids from non-profit organisations who, I suppose logically, have presumed that all human actions are in a sense hyperlocal that they could qualify for this funding. There are a lot of worthy causes in there that do deserve some sort of funding but it clearly isn’t NESTA’s role to be giving them money. Apparently the bid documentation for this process was very light which seems to have encouraged lots of organisations who serially bid for any public money to have a go.

Assuming bids in the latter category are ruled out then the decision seems to be between the first two. This isn’t an easy one and I don’t envy NESTA their task. By going for the technology led bids they increase the chances of something usable being developed and they potentially tap into further private sector funding later on if the app proves successful. However, they are potentially bringing new competition into a sector which is already very fragmented and struggling for revenue. As most of the proposals seem to target the small and medium sized business sector, a small pie is just being broken up into smaller pieces.

If on the other hand they choose to give out cash to existing hyperlocals who will use it for not much more than developing an IPhone app for their web site which will be used by a handful of people, they are unlikely to change the face of hyperlocal mobile in the UK but it might just keep some of the better quality sites in the game a bit longer to allow them to move towards sustainability.

One hyperlocal site operator I spoke to about this said that he wasn’t going to bid because it was going to be a carve up and he named 5 or 6 names that were going to be funded. I’m sceptical that this will happen as NESTA doesn’t strike me as the kind of organisation subject to cronyism and it is worth getting this process right. The emphasis should be on bringing new ideas into an industry that desperately needs them but also looking for a commitment to the industry rather than bids which are stepping stones. I spent an hour looking through bids and didn’t see one that stood out as a definite and there were just three or four basic ideas presented in a slightly different way. In a process like this you expect an 80-90% failure rate anyway so the hope would be there are one or two gems in that list of 165.




About londonhyperlocal

Musing on the change face of local news provision in London
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4 Responses to Decision Day Looms for NESTA on Hyperlocal

  1. Philip John says:

    I wrote about the NESTA program the other day, here:

    To my mind the questions of sustainability for the hyperlocal sector will be answered by helping the existing hyperlocals to find a model that works, not by fragmenting the existing market with new entrants, just as you speak of.

    Dishing out $50k to projects from universities and councils will do nothing to help the hyperlocals that need to find a workable model. Dishing out smaller pots to those sites that actually need it will do far more.

    Unfortunately, NESTA seem to have used their standard approach for stimulating investment which is unlikely to work in such a unique area.

  2. Philip, I think you make some interesting points but these grant awards are already relatively small compared to what organisations like NESTA will have given out in the past. They are already recognising the nascent and fragmented nature of the industry. There is, however, a danger of going too far in the other direction. Smaller hyperlocals can’t be expected to be technology leaders but NESTA should require that they are bringing something to the table. Micro-grants would be difficult to manage and raise the danger of funding the otherwise unemployable who have decided to set up a local web site. It is reasonable to ask that they have achieved some measure of sustainability already before giving them funds. If the site isn’t generating enough to buy basic equipment it is unlikely that the money would make much difference.

    NESTA has a difficult balancing act. On the one hand UK hyperlocal isn’t really a major success story at this point if measured by the size of audience but on the other at least the people currently involved in the sector are committed to it unlike many of the technology companies who may actually deliver but won’t really bring the industry forward.

  3. Pingback: Talk About Local » Destination Local winners announced by Nesta

    • This looks to me like a fairly sound selection. There is a nice spread both geographically and in terms of intent and the successful bids generally look of high quality. There is one that looks slightly odd on the basis of the bidder’s web site and video but the judges see the written submission which the rest of us don’t so it is reasonable to assume that clinched it.

      The concerns about anti-London bias that some bidders expressed seem to have been unfounded with three from the capital. The Midlands seems to have missed out which was a surprise.

      Apart from the Church spire idea there isn’t anything particularly new or innovative among the winning bids although that probably has more to do with the scale of innovation taking place in this sector generally. It is hard to get a genuinely original concept although it was a bit disappointing to see the concept of local daily deals raising its head in a few bids.

      The main surprise was the emphasis on broadcasting apps rather than publishing utilities. Most of the bidders have an existing web presence which as far as I can see don’t seem to be generating a lot of revenue. A broadcasting app relies on traffic to be sustainable and if bidders haven’t been able to develop a revenue stream for a web based effort it would seem likely that they will have even less success with a mobile application where the audience is smaller and the revenue streams are much less well developed. The set up costs of mobile apps is relatively low but the maintenance cost is high due to the constant need to issue new releases for platform changes. It is hard to see any of the apps being sustainable on a revenue basis (not a criticism – very few are) so a better policy would have been to focus on apps for news gathering and community building which may not have covered their face in terms of revenue but would have been of practical benefit to the broader business and therefore given the developers some incentive to continue maintaining them.

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