EXCLUSIVE: ITV AdVentures, the broadcaster’s new venture capital arm, plans to invest £15m in up to five consumer start-ups this year.
And it plans to double down on its VC initiative again in 2022, investing another £15m in between three and five start-ups.
ITV AdVentures offers between £1m and £5m worth of TV ads in each start-up through a so-called media-for-equity deal.
Media for equity means media companies offering inventory – ad space or airtime – in exchange for equity in start-ups.
It’s ideally suited for consumer scale-ups with a broad proposition looking to grow their sales – think Octopus Ventures-backed Secret Escapes, which at one point advertised regularly on ITV.
Of course, ITV wants to get in on early-stage fast-growth companies, the next Spotify or Cazoo.
However, the other less tangible advantage is the insight ITV’s investment gains into fast-growing digital companies.
Niko Waesche, who was brought across from his own Berlin-based VC German Media Pool last year, is looking for fast-growth consumer-facing scale-ups to invest in. One with a B2C proposition, another VC already on board, and one which already has customers and want to grow them.
Waesche says: “We at ITV call ourselves proudly mainstream. If the scale-up is proudly mainstream, then we’re a good fit. We’re looking for very broad consumer-facing business propositions. Media for equity is only for a specific type of consumer-facing growth business.”
ITV AdVentures announced its first media-for-equity deal last month, a later-stage Series C investment in location technology what3words.
The broadcaster will announce its second investment within the next month, with another two or three scale-ups in discussions.
Waesche says his ideal target would be a scale-up that has raised cash through a VC, intending to spend it on a TV ad campaign orchestrated by a media agency.
Says Waesche: “We want to focus on scale-up stage, not fledgling start-ups. Companies where everything has already been set up and is working well, when they want to scale up from 100,000 customers to 600,000 customers. That’s where television can have the greatest impact.”
Waesche says that ITV’s minimum £1m investment alone would put a brand in front of 29m adults at least five times each with about 2,000 spots. (A marketing rule of thumb is that you have to keep driving the message home, with at least five marketing “touches” before somebody says yes.)
Waesche says: “We know that television can help your company grow because you have a consumer-focused product that can benefit from mainstream recognition, from airtime at ITV and our brand power.
“If you come to us for direct media-for-equity investment, we are very interested in making this work for you. It’s better to for you to work directly with us than raise money through a VC fund and then spend that money on TV advertising through a media agency.”
ITV is the latest UK broadcaster after Channel 4 Ventures and UKTV Ventures to offer media-for-equity investments.
The concept began in Sweden, which has now witnessed 400 such media-for-equity deals and has become a familiar one in Germany.
“Media for equity is not as well known in Britain as elsewhere in Europe,” says Waesche. “However, the UK is one of the best places to do this because the start-up ecosystem is so very successful. There’s double the number of unicorns and funding than any other country. This is the place to be.”
Waesche first worked for Upfront Ventures, a Los Angeles-based venture capitalist where he ran its Munich office, specialising in retail and media investments throughout the 1990s.
After the implosion of the first dotcom boom, Waesche worked for IBM overseeing with the computer giant’s corporate media sales.
In 2011 he launched German Media Pool, which advised media companies including the country’s third-largest broadcaster RTL 2 and outdoor advertising giant JCDecaux on media-for-equity investments.
German Media Pool has arranged over €300m of investment in 33 start-ups with 17 successful exits and two IPOs.