ROUNDTABLE 2015: Tim McDougall
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Transcript of ROUNDTABLE 2015: Tim McDougall
Meanwhile:
Marketing-centric,locally-oriented startups
face an early stageFUNDING CHASM.
“AD SPEND IS SCARY.”“It’s not a something early stage startups
are skilled at.”
“Nobody wants to be Pets.com.”
“Rate cards are fiction. Negotiating good rates is labor
intensive. The process is wasteful
and too risky.”
“All funding is hard, but getting investment for
developers or salespeople is relatively easy compared to
getting investment for marketing spend.”
Large local audiences
Startups GET:
Virtuous CircleInvest Media Directly into Early Stage
Startups
Crosschasm
Aligned media partners
Media expertise
Non-cashway to invest
Media Companies GET:
Value for perishable inventory
Innovation/ ”Next New”
Build future advertisers
“So instead of wondering if I got screwed on the
negotiation or I got the ‘good’ inventory – the media
company only wins if I win?
Oh. Light bulb.”
Not the first to think of this.
But implementing in the U.S., for local media companies,
creates big challenges.
“Oh, that’s a great idea!Makes total sense!
It is also completely impossible.”
- 1st Big Giant Law Firm
“The Taxable Event”Cash Invest: Taxed when
and if there are profits.
Non-Cash:Taxed at the time
of the investment.
Challenge#1:
Media Planning1. Not something early stage
startups are skilled at.2. Need to plan across dozens of
publishers, properties.
Challenge#2:
StandardVenture Firm
MDDF DDDF DD
Deal Flow
Due Diligence
Deal Flow
Due Diligence
MediaDesk
1 2 3 4Exchange RateChallenge#3:
Startups need exchange rate in ADVANCE.
Rate cards are complex, vary dramatically, and are NOT
trusted.
“Make it not a headache.”
Keep it simple, fast to market.
+ + =
“You’re not national.”
“Startups lookingto roll out nationally won’t be interested!”
Challenge#4:
Target startups with market-by-market expansion strategy.
1 2
We help startups get from market #1 to market #6 … or #10.
What matters: largest local media presence
in each market.
It’s all about local.
MANAGES
Media Companies:
1
2
3
Media Services(investment)
Capital Contribution(operations)
Input and Guidance(local expertise)
MANAGESDeal Flow
Due DiligenceMedia Planning
Startup MentoringLegal
Tax/Accounting
On-Demand Services
Marketplaces
Ecommerce
* Examples of potential portfolio companies only – while BuiltByLocal has held discovery conversations with all of these companies, is not currently invested in any of them and does not have agreements in place with any, either.
Media Services (Investment)
INOUT
Capital Contribution (Operations)
Capital Contribution
+5%
Profit
1
2
80%Members
20%
Portfolio Companies
Standard
Total Invested
Invested in Portfolio Cos.Mgmnt Fee/ Cap Cont.
$200,000
$250,000$50,000
$200,000
$265,000$65,000
COST of Investment $125,000$250,000
Assume for illustration:3.5 Yr Exits, 2.5X Multiple
CAGR 40.8%18.3%
Incremental Cost of $200K Invested$200,000 $60,000
For illustration purposes, not to imply actual results.
Advisors
Stephen StrausKauffmann Fellow,
Correlated Magnetics, Founder @ Barfly
InteractiveFormerly of Austin
Ventures
Venture Capital
Jim HaddadCFO, M&A for
McLeod Communications,
Yellow Pages
Due Diligence
Greg OsbergFounder @ Revlyst,
formerly publisher @ Newsweek &
Philadelphia Media Network
Media Industry Media Planning
Kalyn AsherFounder/PresidentAsher Media and Avalanche Media
Lora FunderburkeDirector of Media
PlanningAvalanche Media
Group
Eric MathewsFounder & Investor,
StartCo Accelerators, formerly Fedex Labs
Accelerators
Chuck PetersGazette Company
President/CEO
Paul StamanGazette Company
Senior Director Corporate Projects
Strategic & Structural Guidance
1 2 3 4Invest non-cash assets.
Turn perishable inventory
into an asset.
Potential for leveraged returns.
Virtuous circles with startups & investors.
1 2 3Build
FoundationLegal
Tax/Structure
Create Footprint
Media Companies
Invest & DeployStartups
