While startups in the US, especially in the Valley, tend to be able to find funding at different stages of their life-cycle, there remains significant funding gaps remains in Europe, a disparate market of multiple countries. While the seed stage is gradually being addressed by programmes like Seedcamp, SpringBoard, StartupBootcamp and others, the stage just before venture capital kicks in remains problematic. Often that first round of VC is designed for a significant marketing push or expansion.
But a new German initiative looks like creating an exciting model for other countries to follow. It’s really worth watching how this pans out. The newly created GMPVC German Media Pooltakes a “media for equity” approach. Acting like a venture capital fund, it selects startup which are going to benefit from a cross-media advertising campaign. The investment is based on a specific media plan tailored to the startup.
Although GMPVC is not revealing the stakes it is taking in companies we understand the amount is quite low because they don’t want to actively manage the investments. Thus it feels like something of a win for the consumer-focused startup trying to get mind-share amongst consumers.
Thus, three large German media groups are investing their media inventory in the Pool to support internet entrepreneurship in Germany. N24 is Germany’s leading news channel. More than five million viewers tune in to N24 every day. REGIOCAST is a leading German radio company and reaches 11 million listeners every day. Wall AG, a member of the JCDecaux Group, provides outdoor advertising on about 89,800 high profile advertising spaces, including 6,475 advertising spaces on public transportation such as tramways, busses, underground trains and trucks.
This is also the first time (apart from Sweden where there is an existing initiative) that several large media groups have jointly provided advertising in a barter deal to start-ups. It has to be said, media companies very seldom cooperate on anything.
The pooled media consists of TV, radio and out-of-home advertising and is exchanged for an equity stake in high-growth businesses. The Pool also sets up the startup with people who are experience in entrepreneurship, angel investing and venture capital.
Now, the first campaign has gone live for Urbanara a new international online-shop offering home products . The investment will the equivalent of €400,000 in outdoor media advertising consisting of 3,000 posters from WallDecaux Premium Outdoor Sales in 10 German cities.
Dr. Niko Waesche, Founder and Managing Partner of GMPVC says “Media for equity is a perfect way to align interests and incentives behind a high growth business.”