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“We as a group can learn from the ideas of new businesses, too.”

Florian Pauthner, Managing Director SevenVentures

In keeping with the slogan “Growth is our Business,” SevenVentures backs selected startups through targeted investments. Using the media-for-equity and media-for-revenue-share investment models, the ProSiebenSat.1 Group subsidiary, which was founded in 2011, supports innovative ideas with advertising slots on the Group’s free TV stations as well as digital platforms. In this way, SevenVentures harnesses the media power of ProSiebenSat.1 to raise the profile of its partner companies’ brands and get people to form emotional attachments to new products and services. The investor has already seen businesses such as Zalando, Lieferando and Home24 go from startup to listed company. SevenVentures Managing Director Florian Pauthner explains why exchanging advertising slots for an investment stake is such an effective model.
How do the media-for-equity and media-for-revenue-share investment models work?

To this day, it’s difficult for startups in Germany to raise capital in venture rounds. This finance is, however, urgently needed for things such as advertising that will put the company on the map and increase its reach. That’s where we come in with our media-for-equity and media-for-revenue-share investment models: We offer TV advertising slots as an investment currency and receive a stake in the company or a portion of its revenues in return. Through this mechanism, we help new businesses to quickly build their brand and achieve growth, while expanding our portfolio of companies without having to hand over large sums. Both the opportunities and risks are shared. Acquiring a minority interest through SevenVentures also allows us to scrutinize the market and business model closely.  Highly promising companies may subsequently be integrated into NuCom Group, our commerce subsidiary. This worked out especially well with Amorelie and Flaconi, for instance. In some cases, however, we execute an exit strategy at the end of the investment phase and the company reacquires or resells our stake.

“SevenVentures uses the significant media power of ProSiebenSat.1 as a currency in its own right.”
How does SevenVentures decide whether to invest in a company?

Each year, my colleagues and I look into about 1,000 businesses in a wide variety of industries. A company will only pique our interest if it meets a set of clearly defined criteria. For example, we only invest in businesses whose products stand to benefit from the TV advertising’s emotional power. Additionally, a partner needs to already have certain infrastructure in place. That’s important because having advertising shine the spotlight on the business could, for instance, translate into a large number of page impressions and orders. The infrastructure has to be able to stand up to the surge. Our intention is for SevenVentures to act as a sparring partner for the management team, which is why the potential for a good long-term working relationship is also a key factor. Another vital question is whether any other investors are already on board and who they are. Naturally, our interests and objectives need to be aligned. 

Which investment models has SevenVentures already successfully implemented in the past?

A prime example and testimony to the sustainability of our investment models is Home24. In 2017, we made an investment in the online furniture retailer in the shape of an exit participation and went on to promote the company in TV ads. As a result, Home24 significantly accelerated its growth rate and made its initial public offering in June 2018. So our cooperation was a classic win-win situation for both partners. Home24 has continued to invest in TV advertising, making it just one example of many former SevenVentures companies which we gained as long-term advertising clients for our Group after our media-for-equity or media-for-revenue-share partnerships came to an end.

Startups often inject fresh ideas and momentum. How can ProSiebenSat.1 profit from this as a group?

SevenVentures attaches utmost importance to establishing strong, close relationships with the companies’ founders, so that we remain in dialog with them on innovative ideas and the latest trends. In this way, we as a group are continually learning new things, which also helps us to further evolve our own business models. In an industry as dynamic as media, that’s critically important. For one thing, we all face the challenge of making the strongest possible appeal to our specific target groups. Exchanging news and views on the subject can be very valuable. Over and above that, there are also several options for cooperation between ProSiebenSat.1 and the e-commerce platforms, such as joint cross-promotion campaigns. We tap into any and all synergies that emerge.