The Financial Times Among UK Media Expanding Into Venture Investing

Media companies are increasingly crossing into venture capital territory, particularly in the UK.

FT Ventures, the Financial Times’ corporate venture arm, is just a year old and still has “substantial headroom” for investing. DMG Ventures, one of the most active media-for-equity investors, is the venture arm of the Daily Mail Group, and it recently closed two £25 million ($30 million) funds focused on consumer startups. The BBC’s venture fund emerged from stealth last year with a £500,000 ($622,000) investment in Condense, a British metaverse startup.

UK broadcasters are also in on the trend. Channel 4’s C4Ventures and ITV’s ITVAdVentures are venture funds, with the latter announcing three new portfolio investments last month in exchange for advertising on the network.

Though it’s still early in the cycle for the FT, Alexandra Calinikos, the company’s corporate development and strategy director, told AMO that the division’s success rate has so far been “really good.”

Now looking to its second year, the division has an eye toward companies that have an element of AI innovation and seeks to understand which have the potential to change things for the information industry, Calinikos said.

“At the moment for 2025, we are looking at quite a lot of technologies that support, enhance, [and] change data and information, make it easier for media and information companies to operate,” Calinikos said.

Earmarked with £30 million ($37 million) for investing, FT Ventures was the formalization of an “opportunistic” startup investing strategy that the Financial Times has followed for years. Since its formal launch, the division made two follow-on investments and closed three new deals — Canadian news organization The Logic, future-of-work media company Charter and a third, which is undisclosed.

FT Ventures is an opportunity for the company to invest in younger and not necessarily profitable startups, learn from them and work with evolving technologies, and also share their own expertise, Matt Fottrell, president, Financial Times US, told AMO in December.

“Good companies don’t have a problem raising cash … It depends on the market, but generally cash isn’t the issue. You can get cash from most places,” Calinikos said. “The question is what do you bring other than cash or in addition to cash? And I think that’s where corporates can make a difference.”

FT Ventures offers startups either cash for equity, media services for equity or a mixture of the two. Calinikos describes the model as “creating bundles of things that may be worthwhile for the business.” When the FT invested in The Logic, part of the investment was “in-kind contributions” of services from FT Strategies, the media group’s consulting arm.

“Certain brands like the FT can definitely bring a level of credibility to a business because obviously we have a certain expertise in certain areas,” Calinikos said.

Media-for-Equity

The UK saw 17 media-for-equity deals take place in 2023, up from eight deals in 2018, according to data from Mediaforgrowth, a platform for media capital investments. It is the most mature market for these types of deals.

There are over 30 media-for-equity funds globally, most often offering TV advertising in exchange for equity. In 2023, 72 startups raised media capital and the top three most active investors were Aggregate Media, RBS Ventures and DMG Ventures, according to Mediaforgrowth.

The media-for-equity model caters well to consumer brands that need a lot of advertising support to scale and have typically been underserved by venture funds, Diana Florescu, CEO and founder of Mediaforgrowth, told AMO.

“I know some media companies are investing outside of their brand,” Calinikos said. “I’ve come across media companies that when you see them on the cap table you wouldn’t know it’s that company unless somebody told you. How common that is I don’t know.”

The UK has a lot of remnant advertising space, which is unsold inventory of ads. That’s provided the incentive to experiment and try out the new financial model. The model has been used in the UK where it’s considered safer to run a test and see how it goes, Florescu said.

“In the U.S., even if you want to do a test, you’re still looking at probably at least half a million dollars just to get a good sense of what works, what doesn’t,” Florescu said. “It’s a huge, huge market and the media is a lot more complex.”

It’s still early days for the media-for-equity model and there shouldn’t be an expectation of the crazy returns often associated with venture capital, Florescu said.

“Daily Mail invested in Cazoo and then Cazoo exited and that returned the whole fund for the Daily Mail. There’s outliers like that, but I think we’ll have more inclusive information in the next few years,” Florescu said.

Edit: We updated who said the paragraph starting “The UK has a lot of remnant advertising space…” We incorrectly attributed that to Calinikos when it was, in fact, Florescu.