Last week, Jim Ferry, Principal at Volition Capital was featured in an article by Streaming Media on “The State of Media Financing 2023.” Below, please find an excerpt from the piece where Jim shares his expertise on the current state of the media investment landscape:
According to S&P Global Market Intelligence, venture capital (VC) funding as total value of funding rounds went from 41% in 2019 to 45% in 2022 for tech, media, and telecom. The entertainment industry is considered more resilient during downturns than other industries. So, what does it take to get funding? Business fundamentals, growth rates, technology, and sound business models.
Series A and series B funding is where companies head after they’ve gotten off the ground. Series A is considered seed funding. Series B is supposed to help companies that ideally have sales revenue and fund growth.
To secure the necessary funding to survive and grow, says Volition Capital principal Jim Ferry, “You need to have high retention of your clients. You need to be scaling well. You need to show that the margins of the business work, that you’re not going to get disintermediated, and that there’s not a lot of competition for what you’re doing.”
By “disintermediated,” Ferry means that his firm tends to stay away from companies that may function as intermediaries and lose their currency in the market through direct sales to consumers that bypass them. “A lot of the initial ad-tech companies that went public like rocket fuel wound up getting bought for pennies on the dollar because they were disintermediated over time,” he says.
Ferry focuses on internet and media companies. Volition Capital positions itself as a growth equity firm for series A or B investment. In terms of the size of the companies it works with, Volition Capital looks for a “minimum 5 million revenue” from tech companies, Ferry states. “Our check size is 10 to 40 million from an investment perspective.”
With Volition Capital’s focus in media technology, Ferry closely tracks prevailing industry trends, such as ongoing shifts in premium OTT content monetization, which we’ve covered extensively in Streaming Media. “I think we correctly predicted earlier this year that there’s going to have to be a change in the way all these streaming services are charging their customers,” Ferry says. “They’re all moving from pure subscription to ad-supported revenue. There are whole new tiers of ad-supported streaming, which is opening up a lot of opportunities in the ad-tech space and media as well.”
Ferry adds that there aren’t a lot of investors in ad tech because of the inherent complexities of the ecosystem in which ads are served into video, but he remains bullish on ad tech’s prospects in “certain subsectors, such as CTV attribution.” He says Volition Capital is “also exploring platforms that enable [small and medium businesses] to effectively run OTT campaigns, given that the landscape is still dominated by larger brands.”
In addition, Ferry notes, “Contextual targeting remains a hot topic, as privacy updates and the removal of cookies loom over the advertising industry. The problem is there is a reluctance to adopt any of these contextual targeting solutions, while there is still the ability to target through cookies. We will likely see a winner in this space offer a combination of both targeting strategies where end users can slowly transition to contextual over time.”
Read the full piece with Streaming Media here
-The Volition Press