Media for equity funds primarily provide access to media and advertising channels in exchange for equity in a company. However, some media for equity funds may also offer additional services including:
These services provided by media for equity funds can vary widely depending on the fund, geography, and the company they are investing in.
In the last two decades over 1000 companies have raised media capita. The best candidates for media capital investments are typically startups in industries where advertising plays a significant role in customer acquisition and revenue generation, such as e-commerce, fintech, digital health, and other consumer-facing sectors.
Based on our latest research conducted at mediaforgrowth analysing 400 investments, most candidates operate on a B2C model while 31% have a B2B or a B2B2C model. 65% of companies are active whilst 30% exited (IPO / M&A).
Some notable examples of companies that have raised media for equity investments include Airbnb, Coursera, Uber, what3words, and Zalando among others.
No, media for equity is a complementary or alternative model to venture capital. Media for equity funds offer startups a unique way to access significant advertising inventory and expertise that they may not be able to afford otherwise. At the same time, VC firms can allocate capital that they can use to fund their growth and other operational costs. Many founders choose to raise a combination of both.
Investing in an independent media for equity fund can offer several benefits for media companies compared to doing it themselves:
Diversification: Investing in a media for equity fund allows media companies to diversify their investment portfolio, spreading their risk across a range of startups in different industries and markets. This can provide a level of risk mitigation that would be difficult to achieve by investing in individual startups on their own.
Expertise: Independent media for equity funds are typically managed by experienced professionals with a deep understanding of the media and venture capital landscapes. They have the knowledge and expertise needed to identify promising investment opportunities and manage the risks involved.
Time-saving: Getting the legal structure and fund mechanics right (even when investing off the balance sheet) takes significant time. Researching the market and performing due diligence adds up to even more time. By investing in a media for equity fund, media companies can rely on fund managers to handle these tasks and provide them with a curated selection of investment opportunities.
Access: Media for equity funds often have access to a broader range of startups than individual media companies would on their own. This allows media companies to invest in a more diverse set of start-ups, increasing their chances of finding successful investments.
Overall, investing in an independent media for equity fund can give media companies access to a diverse range of start-ups, while also taking advantage of the expertise and resources of the fund managers.
Media for growth (“media for equity” funds) come in two different variants. The most prevalent fund model is entities owned by media companies, which provide startups with their own owned media. ProSiebenSAT.1, Mediaset, ITV, and Channel4 all invest using their own media. The other fund model, independent media for growth funds, is not owned by media groups, but has partnership arrangements with a set of media companies, often covering different media types. The distinction exists in conventional venture capital as well, where corporate VCs are contrasted to partner-owned VC funds. Founded in 2002, Aggregate Media in Sweden is the inventor of this innovative media for equity model.
We refer to media for equity investments as “media for growth” or “media capital”. As the industry evolves, these transactions have become more nuanced. Startups can choose between trading “equity” for advertising or paying part cash, part equity. Media for revenue share deals, matched funding deals can also be arranged, or creative combinations of all of the above.
Media for Equity is a form of investment where a media company provides advertising space and expertise to a startup in exchange for an equity stake in the company.
Rather than providing cash or financing, the media company invests its advertising inventory in helping the startup supercharge its brand awareness and achieve high reach. Media for Equity is a good funding option for scalable, consumer-focussed startups that require significant marketing spend to grow but cannot afford to spend significant budgets on advertising.