Media4Equity Invest, Austria’s new startup incubator for web and mobile companies, mainly targeted at the B2C sector, has just launched – co-founder Michael Lipper told inventures.eu more about what sets Media4Equity Invest apart from “classic” venture capital firms.
Entrepreneurs Michael Lipper and Julian Breitenecker are introducing a fresh investment concept in Austria – exchanging equity not “just” for cash, but for advertising space – be it in print, online, radio or on television. However, that doesn’t seem to be all – Media4Equity is an incubator, a coaching community, an angel investor and a media agency all rolled into one. The motivation behind it, as Lipper puts it, is simply a profound lack of capital for promising young companies. “There is a cornucopia of high-potential startups in Austria and the CEE scene in general, but they are lacking both the money and the media attention to really gain traction. Media presence is just as important as cash, both of which will be provided by us.”
Media4Equity plans to start investing by February 2014 – to this end, negotiations with IP Austria (owner of the RTL-group – largest private TV station in Austria) and Mediaprint (holding newspapers such as the Kurier and the Kronen Zeitung) Krone.at, Kurier.at and Kronehit Radio are almost concluded, Lipper said. Cash investors are also lined up. They are expected to provide “advertising space” with a market value of around 23 million euros in total, as well as approximately 10 million euros in cash.
“For the time being we are still bootstrapping, but as soon as we start to operate, the investors onboard will pay a management fee,” said Lipper. Media4Equity expects to make most of its profits, however, on success fees in case startups in their portfolio make it to a successful exit.
For now, Media4Equity is focusing on establishing all the necessary structures to accommodate their upcoming investment operations. What’s more, despite the steady number of pitches coming in, Lipper said that “[until February 2014] we have to manage our deal flow, communicate with other investors and set up the entire necessary infrastructure.”
How will it work?
In a nutshell, Media4Equity will be negotiating advertising deals on behalf of startups and function as a business angel at the same time. After providing initial cash – estimated at an average of up to 500.000 euros, according to Lipper, startups will receive coaching, advice on operations and mentorship. Once teams have established an operational product and business model, startups will be provided with capital in the form of advertising space, worth up to 1,5 million euros – showering the company in attention and (ideally) boosting revenues and user base.
Successful startups will be assisted in scaling their operations into other countries as well – utilising deals with other media investment companies and cash investors.
Media4Equity currently plans to invest in 15 startups for a period of ten years – Lipper and Breitenecker are currently doing so privately in the German company 50Hours, which might be taken over into Media4Equity Invest’s portfolio.
A big shot could be their first incubation project Locca!, which Breitenecker is the CEO of. The tech startup promises to locate all your lost or stolen items like bags, bikes, cars, pets or even your kid. What’s more, on 4 October the team will be launching a crowdfunding campaign on indiegogo.
One way or another, the spotlight will be on a few more startups shortly – they better be prepared!
To get in touch with the team, go here.