Media owners’ advice on investing in startups

Representatives from Sanoma and Dennis were on stage today at FIPP’s Digital Innovators’ Summit in Berlin to talk about why investing in startups is worthwhile for traditional media businesses.

Herman Kienhuis (pictured), investment director, Sanoma Ventures, The Netherlands, said that big corporations can’t move as fast as technology any more, and investing in startups is a good way to inject entrepreneurship into the organisation.

“We have to create different options for the future,” said Kienhuis, “and investing in startups increases speed and reduces costs because we’re limiting experimentation. We see high growth of entrepreneurship in our industry, and a real need for investment.”

Sanoma Ventures was launched in 2012 with a strategy to invest in startups investment is typically between €100,000 and €1m. According to Kienhuis, investing in startups does come with challenges, but it’s key to have patience, let go of control, compete with core, focus time on stars and accept failure.

James Tye, CEO of Dennis, UK began by saying that 25 per cent of the company’s revenue comes from digital. This figure was six per cent in 2007. And his advice for investing in startups? “Give it a go! The process of scoping out somebody else’s business makes you learn a lot.”

Tye stressed the fact that investing in these companies is very time consuming, because you need to see a lot of businesses before making an investment decision. He also gave advice to those looking to make investments: “I know it’s really hard, but you’ve got to give up control. If you really want to make these businesses succeed, you have to step back a bit.”

James Tye’s reasons why you should create enterprise:
Develop revenue streams outside of traditional publishing revenues. Innovation
Business stability
Entrepreneurial culture

What does a successful enterprise look like?
Good partners and shared vision
Strategic benefit
Mix of cash and services
Hands-off approach
Enhance assets and services
Different measures of success
Don’t expect same profitability turnover from these investments, like you would a magazine or website. Success is measured differently.

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