What does Media for Equity mean?
Media for Equity is an innovative funding concept for high-growth entrepreneurial companies. It is a barter scheme in which advertising inventory provided by media companies is traded against equity. Media for Equity is a great idea for companies, which are ready to scale through marketing but need their cash to finance their growth. With a minimal amount of cash, a significant media campaign can be realized of a size which normally only leading global consumer companies can afford.
What is the advantage of a Media for Equity pool?
GMPVC German Media Pool was founded with the support of several media partners to provide start-ups with the opportunity to run professional cross-media ad campaigns. The pooling of several media types in an advertising fund is unique in Germany. Businesses can run more effective and targeted campaigns when they have several media types at their disposal. The pool approach has other advantages, too. Campaigns can be optimized in flight and media types weighted according to effectiveness. As an independent service, GMPVC works together with our media planning partner ants communications to create individualized media plans.
Does GMPVC get paid by start-ups? Is there a management fee?
No, this is a barter deal. Start-ups have to pay third-party costs associated with an advertising campaign, however, including production and other costs. GMPVC provides a estimate of these costs and guidance for start-ups.
How do your media partners get their returns from the investment?
GMPVC’s media partners only receive a return if the start-up successfully grows and the equity stake is sold. We all share in the risk of a start-ups’ success.
Is there a bottom limit on investments or a ceiling?
There is no bottom limit and the only ceiling is the total fund size. It really depends on the specific company – how much media is necessary to achieve the desired targets. This can be very low, too.
What are your investment criteria?
We invest in companies with great teams, which will benefit from marketing and grow quickly. Usually, there needs to be seed financing in place before we invest, otherwise a company’s capabilities are not there yet and the business cannot scale. This is why seed financing in place is one of our main investment criteria.
Do you invest only in internet companies?
No way. We invest in all types of companies that will benefit from a significant marketing campaign and grow accordingly. We are explicitly also looking for non-internet companies such as, for example, smart retail franchise concepts or new brands, which want to grow in the German market.
Can you only support German companies?
At the moment, we are focused on enabling growth in the German market with German media, but we don’t only finance German companies. On the contrary, your company can be from anywhere.
How do you make sure you deliver quality media?
We invest on the basis of an individual media plan, which contains the media strategy including target groups and other considerations. The creation of the media plan is supported by our partner ants communications, an independent media planning company with many years of expierence in the field.
What other services do you provide?
We offer guidance all around the topics of media, communications and marketing. Our network, including our Advisory Board, is at the disposal of our start-ups. We are there to help you in any way we can. That is what we think of when we can’t sleep at night.
Do you get involved in the governance of your portfolio companies?
We consider ourselves media specialists. We are best-of-breed partners, specifically dedicated to helping you grow with media. We don’t get involved in the running of your company nor in your decidions (unless you ask us, of course).
Are you a competitor to VCs?
No. We are a partner for the VC ecosystem, including angels and other funding sources. VCs understand that media is a tricky business and the value of getting leading media groups involved directly as partners. In fact, most of our deal flow comes from VC friends – we are thankful for that.
Do you work with other media partners?
Our first pool is closed, but we are always interested in speaking to media partners. On some deals, we will partner side by side with other media groups. A great variety of innovative combinations are possible. We always want to do what is best for our start-ups.
How do you establish the value of your media?
Media has a market price that keeps changing to reflect the economic cycle and market conditions. We invest at current market prices – prices which our partner’s advertising clients would also pay.
Media not yet relevant for my company, right now I just want to follow what you do.
Super, please do! We welcome you on Facebook/GMPVC or follow Niko and Aljoscha directly on Twitter: @cafelido and @joschak.