Media for Equity in Eastern Europe: an untapped potential

Media for Equity, as an investment model where media resources are traded for equities and capital between Media Groups, Media for Equity investment pool and companies, is quite popular in Western Europe in countries such as Sweden, Germany, Italy, United Kingdoms, Spain, Belgium.

Aside from Russia and Poland (whose Media for Equity investment fund has gone defunct meanwhile), there are virtually no Media for Equity investment funds in Eastern Europe.

While we have no data on the way eastern european countries operate their media space and the regularisations around it, there is certainly an untapped potential in this region.

According to Statista, the average TV consumption in Eastern Europe in 2021 is 205.4 minutes/daily, so there is a huge opportunity for local startups and scaleups to reach a wider audience and potentially get to a larger customer base.

Unfortunately, the eastern european markets are consistently behind their western counterparts so implementing a rather new investment model could take some time, but it can also prove to be the place where Media for Equity can be implemented in a much more efficient way right from the start.

The beauty of Central and Eastern Europe is that there's an opportunity to get the railroad right for industry collaboration, says Vinay Solanki of Channel 4 Ventures.

‍

Why is Easter Europe still behind Western Europe: a comparison between Western Europe startups and Eastern Europe Startups

When we talk about Media for Equity investment funds, we should start the discussion with the place where it is most prominent and profitable: the european space.

The european space is divided into several spaces, but the most important category is the Western Europe and Eastern Europe. The two regions are at different levels, from an economic point of view.

There are several reasons for it:

• In Western Europe there are more VC funds that allow for startups/scaleups to get fundings, meaning that these will also increase the number of jobs, leading to an implication from the public authorities that step in with certain benefits.
  

• In Western Europe there are a higher number of universities that form partnerships with accelerators and VC funds that allow the potential future entrepreneurs an easier access to funding and getting it started.
  

• Talent is a large part of the reason the CEE tech boom came about. Yet talent needs financial support, access to technology, mentors (ex. alumni from the same university), less bureaucracy, broader linkage between the academic and business/corporate world.
  

• The need for a solid legal framework is absolutely essential and Eastern Europe has some limitations when it comes to it.
  

• There has to be economic and political stability and Eastern Europe does not fully meet this requirement, due to the fact that some of the countries from Eastern Europe are not yet present in the European Union.
  

There are two central solutions to narrow down the difference and bring the two regions at the same level.

1. Setting up more contexts where startup/scaleup founders can meet investors (VC funds, Equity Funds, Business Angels, Corporate Funding): tech summits, workshops, incubators, etc.
   ‍
2. Teaching both entrepreneurs and the business ecosystem about alternative ways of financing, such as the Media for Equity investment model.

‍

The case of Media for Equity in Eastern Europe

Countries like Romania, Bulgaria, Ukraine, Greece, Croatia, Hungary, Slovakia, Czech Republic could all benefit from the advantages of setting up a Media for Equity investment fund, given the reach of their TV stations and media conglomerates.

Media Groups from this region should consider offering Media for Equity deals because it would be a breakthrough investment opportunity. There is virtually no competition.

Local startups would benefit from these Media for Equity deals by being able to get brand awareness, increasing the evaluation of the startup, thus meaning a more valuable equity to the Media Group.

Media Groups as well as startups need to consider Media for Equity as an important investment model.

Its success is proven especially when we look at case studies such as Zalando and About You, both of which became unicorns (an evaluation of $1 billion) in the few years following the Media for Equity deals.

First of all, Media Groups need to understand the viability of the model and startups need to know how they can get such deals.

We have written a whitepaper on the subject of Media for Equity, “The rise of Media for Equity as an alternative investment model”, with the aim of shedding light on this successful investment model.