India’s largest media conglomerate Bennett, Coleman & Co Ltd, or BCCL, has found an innovative way of picking up stakes in early-stage companies in return for providing advertising opportunities across its diverse media platforms, a practice it has been following for over a decade.
In an arrangement that could be first of its kind globally, BCCL, also known as the Times Group, has partnered with local private equity and venture capital funds, which grant BCCL a stake in their investee companies in return for advertisements and promotions across BCCL-owned properties that include the country’s largest English daily by readership The Times of India, The Economic Times; news channels Times Now and ET Now; radio stations operating under Radio Mirchi brand and a host of internet platforms among others.
Called Divinitus Capital, the division makes notional contributions to the funds raised by PE and VC investors by offering advertising solutions which are valued as per mutual negotiations between BCCL and the investors. Divinitus is housed under Brand Capital, the ad-for-equity solutions division of BCCL.
“It is a collaborative model under which we come on board as investors in companies PE/VC operators deploy their funds in,” said S. Sivakumar, BCCL’s head of strategy and innovation and Brand Capital’s CEO.
Sivakumar said Divinitus has, so far, partnered with four VC firms and made investments worth Rs 2,000 crore. In other words, BCCL will provide advertising and promotions opportunities worth Rs 2,000 crore to the investee companies on its media platforms and hasn’t made a cash investment of Rs 2,000 crore. “This year we plan to close three such deals,” he added.
Seed-stage venture capital firm Blume Ventures, startup investor Rehan Yar Khan’s Orios Venture Partners and Sixth Sense Ventures are some of the investor firms that BCCL has so far partnered with.
On their part, VC firms find Brand Capital playing a unique, and critical, role in the startup ecosystem. “It is the perfect investment vehicle for consumer-facing brands, whether in the e-commerce space or consumer goods sector,” said Ashish Fafadia, chief financial officer and principal, Blume Ventures. “Startups wanting to connect with consumers directly and build a brand recall need to invest heavily in advertising. In many cases, advertising and marketing spends are one of the biggest cost heads on a company’s books. For such companies, having an investor that can provide the much-needed media push early in their life cycle is ideal,” he added.
This is the first instance of PE and VC investors partnering with a media company at the fund level. Even outside of media sector, there aren’t many Indian companies that deploy funds with PE or VC investors. Some companies, such as Reliance Industries Ltd, have invested in alternative investment funds while technology firms such as Infosys and Wipro have created their own funding arms.
While BCCL has been running the much controversial ad-for-equity practice for over a decade now, the Divinitus model provides it access to a bigger pool of companies and also saves it the bother of running a due diligence on the viability of the investee companies, thus, keeping its notional investment safer.
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