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October 19, 2021

Grai Ventures study: Media for equity, the efficient alternative solution for investments in Romanian startups

  • “Media for equity” is a financial model at the beginning of the road in Eastern Europe, especially in Romania, Ukraine, Bulgaria, and Greece.
  • Grai Ventures launches a new research that presents this financial model as the solution for startups to finance themselves in a smart way.
  • The total volume of “media for equity” transactions increased by 950% in the last ten years compared to the same previous period
  • Among the most active TV stations in the use of this alternative investment model in Europe are Channel 4, German Media Pool, ProSieben, and Mediaset.


The global demand for advertising in traditional media is on a downward trend, so a new financial business model is emerging, with multiple benefits for investors and entrepreneurs: media for equity. This is the conclusion of the most recent study, “Media for Equity as an Alternative Investment Model”, conducted at the European level by Grai Ventures, a Romanian venture building company with experience in developing and scaling up startups internationally. The research, unique at the European level, highlights the “media for equity” investment as an effective solution for financing “direct-to-consumer” startups (Business to consumer / B2C) and a promising alternative for media organizations to increase profitability for TV stations that are facing digital disruptions.

The Grai Ventures study shows that startups have 9 times higher chances of success (87%) if they benefit from advertising instead of capital. Therefore, receiving media advertising in exchange for a share in the capital, the media conglomerates diversify their holdings portfolio. Currently, at the European level, Channel 4, German Media Pool, ProSieben, and Mediaset are among the most active TV stations in using this alternative investment model.

For the “Media for Equity as an Alternative Investment Model” study, Grai Ventures analyzed more than 414 rounds of financing for 149 companies with data sets compiled from Dealroom, Crunchbase, Europe Venture Capital Review, and Statista to identify and profile the total number of European startups that have benefited from media for equity, since 2000. The extracted data show that the success or failure of a startup depends on several important factors, including knowledge of the market in which the product will operate and understanding how media works. Currently, a significant percentage of startups fail exactly because these factors are not fulfilled: 34% of startups, due to the mismatch between product and market, and 22%, due to insufficient understanding of marketing strategies and how in which the media works*.

“Currently, in order to advertise their businesses, the founding members often rely on digital marketing as a cheap and affordable way of advertising. However, most B2C startups need to have more coverage to grow their customer base, and conventional advertising, such as TV, is too expensive for a startup company. After months of hard work, we are pleased to launch this research which we hope will be not only a real growth tool for startups and the media but also an awareness of the steps they need to follow so that they can build strategic partnerships, with win-win benefits.”, said Diana Florescu, CMO and Managing Partner of Grai Ventures.

The study by Grai Ventures reveals that since 2010, 149 startups have adopted Media for Equity (M4E) as a cost-effective way to increase their visibility and access to mass markets through TV advertising, Out-of-Home (OOH), printed and radio channels.

There are impressive examples such as Zalando, a German startup that sells clothing, which has concluded a media for equity transaction with the SevenVentures investment fund. SevenVentures invested in the company advertising media in 2009. Zalando’s sales exploded from $ 6 million to $ 1.8 billion by 2013, an increase of 29,900% in just a few years. Zalando and About You, two German retailers, received advertising in Germany, the Czech Republic, Switzerland, France, and Austria.


Media for equity – an untapped opportunity in Eastern Europe


The Grai Ventures study shows that the media for equity model remains an untapped potential in Eastern Europe. According to the same research, only Russia and Poland have adopted the model so far, but they are no longer active.

“Eastern European television groups miss the opportunity to demonstrate that they are key partners in building digital brands and businesses and diversifying revenues. Television still attracts a massive audience across Europe. Startups that address consumers directly take television much more seriously than they did a decade ago. It is not too late for Romanian televisions to start offering advertising contracts to newcomers in the digital sphere, from the very beginning”, underlines Ștefan Koritar, CEO & Managing Partner of Grai Ventures.


What kind of startups are suitable for this investment model?


Among the most popular sectors for this alternative financing model are software and e-commerce companies that develop direct-to-consumer oriented products. All of them have completed at least one initial seed infusion, of the “seed round” type, before benefiting from conventional advertising, and 90% of them were in the sales generation stage when they increased on average for equity.

The conclusions of the research, but also information about the methodology behind “Media for equity as an alternative investment model”, can be found here.


*The report Startup Genome

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