Best Buy Wants to Fund Your Startup

Consumer electronics retailer, Best Buy is looking to get into the startup business. Best Buy will be provided the capital for a new investment fund dealing solely with digital media. The fund will be managed by Fuse Capital formerly Velocity Interactive Group. Fuse brings it’s experience investing in technology startups while Best Buy brings the capital to fund the ventures although neither of the companies has disclosed the monetary value of the fund.

It may sound strange for a large chain retailer to enter a realm usually reserved for hedge funds and venture capitalists, but there’s a method to Best Buy’s madness. It’s all apart of the plan to expand its reach into the ever-expanding digital entertainment market, hence the acquisition of music sharing site Napster last September. And with big box retailers like Circuit City and Virgin Megastores folding left and right, it’s time to shake things up and find new and creative ways to generate revenue. If Best Buy can fund the next Twitter or Hulu they can leverage their investment to bring in more money and users.

According to the New York Times, Fuse Capital will invest the fund in “start-ups that offer games, mobile applications, photo and music sharing, online video and personal media management.” While this is definitely a good move for Best Buy, one shouldn’t overlook the effect on potential startups. Since most startups begin their operations on a shoestring budget, which impedes the speed of progress. Having a large company pumping the necessary finances into the operation goes a long way in producing a quality product. Another advantage of working with Best Buy is its massive reach into the consumer market. With operations in the United States, Canada, China, Europe and Mexico, startups have a built-in audience that they normally couldn’t access on their own.