Media for equity
Media for equity is an alternative investment model which succeeds in economies where venture capital is in short supply. Media companies which have unsold advertising space in their publications or other media trade this space to start-up companies, which don't have money to spend on advertising, in exchange for stock in the companies. The companies receive advertising space instead of cash for their stock.
Media for equity funding fills a gap in funding which exists after a new company has spent its initial seed money, and hasn't yet grown enough to attract large venture capitalists. The company uses the advertising to increase its customer base, thereby increasing the value of its stock. The start-up company makes money directly, and the media company can sell the stock at a profit.
This method of funding new and small companies has been commonly used in Europe since the late 1990s. Two examples are the Stroeer company, which specializes in billboards and street furniture, or the German television group ProSiebenSat.1. Tens of millions of Euros of media have been provided to startups in Germany using this investment model, for example to Zalando, an online shoe retailer.
A similar but more complex model is the media for equity fund. In this model, several media companies together commit advertising space to a fund intermediary. The fund exchanges this media for shares in one or more high-growth companies. These funds are called cross-media funds, because they can provide different types of media to a single high-growth company. Four such media for equity funds are Addinvest.se, Aggregate Media Funds in Sweden, L'Express Ventures (created by L'Express Roularta) and 5M Ventures in France and GMPVC German Media Pool in Germany.
Media for equity funding can be found in many areas around the world, for example in India through the Times Group’s fund Brand Capital, PE Global Media Fund and NetMediaVC of New York, German Media Pool of Berlin, 5M Ventures of Paris, Hagan Capital Markets of Atlanta, Georgia and Leverate Media in Berlin.
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- TV is Back: Why internet companies are taking out TV ads German Media Pool
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- New-gen PE Global Media Fund pays with media ad spots, Times of India, 11 June 2008
- NetMediaVC Makes $5 Million Media-for-Equity Investment in ClubAmerica.net, New York Business Wire, The Free Library, 27 March 2000