crossvertise, Interview with CEO Matthias Völcker

Launched in 2009, Munich-based start-up crossvertise provides a cross-media booking platform for advertising media. Recently, it received an investment from High-Tech Gründerfonds and BambooVentures (read here).
We met CEO Matthias Völcker, who frankly told us a little bit more about the company, the product and the team, the funding and future plans.

FinSMEs: Hello, Matthias, thank you for joining us. First, can you tell us a something about crossvertise? How did you come up with the idea of creating the company?
Matthias: Well, in a nutshell: crossvertise is the first media marketplace for every kind of (online and offline) advertising media, where companies as well as agencies can get profound information about the advertising market and have the possibility to book ads easily by themselves. In this way media buying is as easy as buying a book online for example.
So how did we get the idea? We were working as management consultants and came in touch with media in the course of some projects we were in charge of. Due to our own hardships in finding profound information and media data, not to mention the opportunity to book the requested media on our own, we decided to attend to that matter. Of course we were new in this area and had to learn a lot. But afterwards it turned out, that this was a fortunate coincidence as we came up against all possible difficulties and were able to understand the needs of our clients. With help of several experts, professional literature and lots of practical training we learned the ropes of media business very quickly. After nearly two and a half year we now have got comprehensive knowledge, a wide network and strong partners in every media type.

FinSMEs: What is it? How does it work?
Matthias: crossvertise is a platform that connects the demand and the supply side in the media industry efficiently. It enables advertisers to save time and money and it offers publishers an additional and strong sales channel. Advertisers can use the platform including the latest and most extensive media data free of charge and find suitable media even without having specialized knowledge or using expensive software. They can request offers and negotiate with several publishers at the same time and purchase all types of media from one single source and with one simple click. Compared with platforms offering only one or two media types, publishers benefit from crossmedia synergies, because advertisers get to know complementary ways of doing advertisement they never would have thought of.

FinSMEs: What’s your business model?
Matthias: crossvertise acts as intermediary (broker), matching the supply and demand side in the advertising industry. Besides the regular market commission charged from publishers upon every booking (usually 15%), revenue is generated with premium accounts and other additional services available for advertisers. Thereby crossvertise initially addresses SMEs with small to medium size media budgets and small agencies, which are not equipped with expensive high class software and media data.

FinSMEs: Could you tell us a bit more about the features that differentiate the service from competitors?
Matthias: First of all we are the only company to bundle all media types on a single online platform that is open to the public. This means that advertisers can get direct access to a majority of the available media in the categories print (>18.000 newspapers, magazines etc.), online & mobile (> 5000 websites and apps), out-of-home (>160.000 billboards), radio (>500 stations), cinema (>4.800 screens) and TV (~ 400 stations on demand) and usually even have a price advantage using crossvertise.
Secondly we are transparent, provide independent information and vast media data for free and present innovative and often unknown ad specials regularly. This is also new in this sector!
And finally, due to our strong partner network, we can convey complementary services such as media planning, creation, production, PR etc. So you could call us a self-service one-stop shop in the on- and offline advertisement industry. But of course we also have a trained call-center and professional customer service available in case someone needs assistance or wishes personal advisory.

FinSMEs: Could you introduce us the other team members?
Matthias: Sure, my founding partners are Thomas Masek (COO/CFO) and Maximilian Balbach (CTO). Thomas and I have been working together on the project, initially called werbetraeger24, since two and a half years. Thomas is responsible for operations, human resources and finance. Max joined us at the end of 2010 and has programmed the platform from scratch. He is in charge of product development and the technical implementation. I, in my position as CEO am responsible for strategy, business development, sales and investor relations.
We have been growing extremely during the last few months and have recruited several media experts and experienced developers for our headquarters in Munich and our off-shore unit in India. We consider ourselves fortunate having found such a great team, where every member complements one another and shares the entrepreneurial spirit with us.

FinSMEs: Why did you start thinking about raising capital?
Matthias: That´s a good question. After we had received a 100k Euro joint sponsorship of the German government and European Union and started making first revenues, we were fairly thinking about boot strapping. However, there were several reasons that brought us about the decision of raising capital. The focal idea of crossvertise is quite revolutionary and there is a great upside potential that leads to followers trying to copy our business model. After all it is a fast growing 30 billion Euro market in Germany and 350 billion worldwide from which we want to snatch a piece of the cake. In order to retain our first mover advantage and to ramp up our turnover quickly we needed sufficient man power and cash to pay our office and all the other bills. So we searched for investors that share our vision and also have enough capital and a strong network to secure ongoing growth and scalability. Having found such investors and strong partners makes life easier, anyhow.

FinSMEs: Today, many tech companies try to raise venture capital, I know that this is not easy. What did you do to reach this target? Was it easy to close the deal?
Matthias: To be honest, we started the search for investors already in January 2011 and never thought that it would take so long to close the deal. After many big players before us had failed due to the incredible complexity, people just didn´t believe that we would ever manage to win enough publishers as well as advertisers to make the marketplace attractive for the reverse side. So we searched for strategic partners and pilot customers to show the proof of concept. After we had aggregated about 80% of available media in Germany in our database, finalized a functional prototype and started making six figure revenue we soon had the first term sheets on our table. Partnerships with Microsoft, Jost von Brandis (one of the leading out-of-home specialist), WerbeWeischer (the leading marketer of cinema advertising) and mediaservice wasmuth (the leading media database developer) of course also made things easier. All in all it was a great deal of work and a situation I will never forget in my life.

FinSMEs: Who are the investors?
Matthias: The lead investor is the “High–Tech Gründerfonds” that invests in high potential high-tech start-ups in Germany and has about EUR 560.5 million under management in two funds. Investors in this public/private partnership include the Federal Ministry of Economics and Technology, the KfW Banking Group, as well as twelve industrial groups of ALTANA, BASF, B. Braun, Robert Bosch, CEWE Color, Daimler, Deutsche Post DHL, Deutsche Telekom, Qiagen, RWE Innogy, Tengelmann and Carl Zeiss.
Furthermore we are financed by the investment consortium “BambooMedia”, which is bankrolled by the private investors Michael Streich and Dr. Maximilian Levasier (the founder of `BambooVentures GmbH´) as well as Dr. Hellmut Kirchner (“5K Investment GmbH”) plus “FIRST VALUE AG” with numerous financially strong and experienced shareholders.

FinSMEs: How are you using the capital?
Matthias: The next challenges are to completely implement the marketplace and to acquire additional customers to expand our market position and boost our revenues. For that reason we are using the resources primarily for the IT infrastructure, recruitment and marketing and PR operations. Especially the recruitment of additional qualified personnel to process the constantly growing number of orders will be a crucial factor, as well as selective advertising measures to increase our awareness.

FinSMEs: Do you already plan to raise an additional round?
Matthias: Yes, but in the moment we are 100% focusing on technical progress as well as business development. The amusing thing is that now, that we have finally closed the deal, we get quite interesting investment offers constantly. We will need to monitor the further development and of course keep speaking with investors regularly. Nevertheless we are planning to expand to foreign markets by the end of 2012 and therefore we are still open for talks and offers… you never know!

E.C./FinSMEs

24/02/2012

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