In the capital market SevenVentures provides B2C growth companies with something unique: access to an audience of millions through TV advertising. Their flexible investment models Media for Revenue and Media for Equity have supported companies like Zalando, Lieferando and About You to reach mega brand status. We put five questions to the members of the management team – Florian Hirschberger, Maximilian Jochim and Florian Weber – on the company’s priorities, partnerships and the impact of Corona.
What are the most exciting investment sectors for SevenVentures currently?
Fintech and Insuretech are hugely exciting sectors for us and we have great companies here – Friday and ottonova, to name just a few. In addition, eHealth and telemedicine are further growth areas for us at the moment because the sector has just been deregulated and there are many new companies coming forward in this space. TV can really help in these sectors, not only because it’s a great awareness raising tool but because it can help to build trust in a brand. Besides, the ecommerce sector continues to be extremely compelling for us because TV is really successful here through its overall reach. All of these sectors have received a huge push by the Corona crisis.
What are the biggest challenges that start-ups in your portfolio face on their path to growth?
The main reason why companies come to us is that they want to grow, build awareness and reach and they have exhausted what they can achieve through pure performance marketing. They are looking to take the next growth step and invest in branding. However, because they are growing so quickly, they have a high demand for liquidity. Furthermore, for many founders TV is completely new; they are digital natives who have grown up with performance marketing and of course they want to measure the impact of every cent spent and avoid inefficiencies. There’s also the challenge of scalability. Once a company does a deal with us, TV can increase revenues extremely quickly and companies suddenly realise that they need the people and the organisational set-up to execute growth potential.
What makes a great partnership with SevenVentures?
Every one of our partnerships is different. We design the collaboration individually for each partner depending on their needs. There are certain things we require from our partners: they have to be relevant for TV and their infrastructure and logistics have to be right because it helps no one if the product is in demand following a TV campaign but it’s not available on the store shelves. We believe in long-term partnerships. We have been with some of our companies for over 10 years. That is fairly unique in the venture capital market and something they wouldn’t see from a standard advertising partner. There are also other advantages to working with us, for example we can use synergies within the Seven.One Entertainment Group for the benefit of our partners.
How has investment behaviour changed in Germany during the crisis?
Obviously, the crisis is still ongoing and the full effects have not yet been seen. However, when the first lockdown started we quickly saw that many investors and companies decided to focus on their core business. There was huge uncertainty in the market and many financial investors started to look very selectively where they were investing their money. Uncertainty means risk, and Corona was initially perceived as negative risk rather than opportunity.
Then it quickly became apparent that there were certain companies who would profit long-term from the crisis and there was still huge liquidity in the market. The partner funds that we work with, with very few exceptions, were still investing. It is clear that good companies can still access good money.
Our investment behaviour basically hasn’t changed and we are still prepared to support our partners long-term with their growth. Our portfolio companies with media for equity deals certainly appreciated this during the crisis. When the crisis hit, most companies drastically reduced their marketing spend due to budget and liquidity restrictions, but our equity partners were still able to access TV and hence retain visibility for their core customer base – as it was cash neutral for them.
What are the big opportunities for B2C companies in the post-Corona age?
Firstly, deregulation accelerated by digitalisation such as the case of eHealth. Secondly, customer behaviour has shifted because we are working more from home, doing a lot more via video conference, and also purchasing and ordering online. Several companies have profited hugely from this. However, even though Corona has created clear winners, life will surely correct itself to a certain extent once the crisis ends. There will be things that stay with us like eHealth – you can now ask a doctor to sign you off work via video conference, and this alternative will certainly continue to be used after the crisis – but there will also be things that revert back. People will want to regain their quality of life again and do things like eating in restaurants and physically going shopping. Successful companies are aware of this, will act flexibly in the future and adapt their business model to these circumstances.