Media for growth (also known as “media for equity” or “airtime for equity”) is a financing option that provides start-ups with advertising such as television, print, radio, and online, in return for equity in a company.

Research by global network of media investors mediaforgrowth, reveals first-time findings about the state of media for growth investments worldwide including the business performance of the start-ups that have raised media for growth, the biggest players in this space, and the level of investment activity across various regions.

With a global recession forecast, the study shows how media for growth funding emerged during the dot-com bubble as a complementary investment option to traditional venture capital offering start-ups a life vest till they were able to raise the next round of capital.

“With uncertain times worldwide, it’s understandable that taking risks in a new venture doesn’t appeal to everyone. For start-ups facing a new reality, a good place to start to reevaluate is their growth rate. The new view of growth is not at all costs, but growth at a reasonable cost. At mediaforgrowth we help ambitious founders tap into complementary funding option to VC funding such as “media for equity”, while 1 preserving cash reserves and reducing dependency on raising new rounds of funding” Diana Florescu, CEO, and Founder at mediaforgrowth

Key Findings

The study analysed the data of 382 unique media for growth investments completed globally during and after 2000.

• Despite the preconception that traditional advertising only works for direct-to-consumer start-ups, 31% of companies who raised this funding type operate on a B2B or a B2B2C business model;
• Seed-stage and Series A are the most popular stages of growth among start-ups when they closed their first round of media for growth funding;
• 65% of companies are active; 31% exited (IPO / M&A); 4% have folded;
• The sectors less likely to attract media for growth funding are e-commerce (19%), digital health (10%), fintech (9.5%), food, and beverage (6%). Other industries that are coming in strong include EdTech, Gaming, and Creator Economy;
• start-ups backed by both media and VC investors reach the exit round (via IPO) 2 years and 8 months faster than traditional venture-backed start-ups;*
• Media for growth-backed start-ups raise on average 3x more funding than other start-ups.**

How do regions compare?

• Leading European countries by no. of investments include Sweden (167), Germany (90), Spain (35), and the UK (30). Media for growth funding was also raised in France (10), Italy (5), and Finland (3).
• In India, the Times Group completed 900+ investments.
• In LATAM, Televisa is one of the most active investors with 11 deals completed to date. There have been 5 investments registered in Brazil.
• Australia registers 9 investments whilst in North America there is only data available on 3 investments completed by Arrandale Ventures.

It’s not a time to pay lip service to brand building

Even before the current tech volatility and recession, getting marketing right was a challenge for businesses as the latest Startup Genome research shows.

22% of start-ups fail because of marketing problems and lack of expertise.***

Cutting marketing budget might seem like a first instinct during an economic crunch. However, high-growth start-ups who have invested in communication and brand building pre-2022 are realising that any cut in spending will come at the great expense of their revenue and staying “top of mind”. With less capital available in the market and having to prioritise cash flow efficiency, founders should know that media for equity funding is the perfect formula to continue growing their business while preserving cash and reducing dependency on raising new rounds of funding, adds Diana Florescu, CEO and Founder.

But not all businesses are standing still. what3words, a UK-based B2B2C digital mapping startup what3words launched its product in India in 2022 after securing a $10 million media for growth investment from Brand Capital International. A few months later it announced a €60 million media for growth investment from German Media Pool VC (GMPVC).

After the first TV campaign run in collaboration with Channel4 we realised that TV works well for our businesses and looked to replicate this approach in other markets including India. The partnership with Brand Capital International (The Times of India Group) has accelerated our presence in the region, says Chris Sheldrick, CEO, and Co-Founder.

The industry still faces challenges

Although media for growth investments are increasingly being acknowledged as powerful engines for sustainable growth, the industry faces multiple challenges that impede its growth including lack of transparency and data, a set of industry standards and recognised organisations to educate stakeholders.

The study also identifies seven of the most widely held beliefs holding back the adoption of media for growth, and looks to approve/disapprove them:

• Myth 1: TV ‘doesn’t work anymore’.
• Myth 2: Traditional advertising is hard to measure.
• Myth 3: TV is too expensive.
• Myth 4: Media for growth funding only works for “direct-to-consumer” (DTC) brands.
• Myth 5: European markets are global leaders within media for growth space (by no. of investments).
• Myth 6: Media for growth uses unsold inventory, therefore low quality.
• Myth 7: Media for growth doesn’t provide the startup with actual cash, therefore is less valuable than venture capital investment.