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LARGO, Florida (July 11, 2011) – DOOH.com’s Original Articles by Tony Hymes (Editor) – Multiple Strategies for DOOH Investing.

The first couple of articles in our series on DOOH Investing featuring CEO of UR-Channel, Ira Terk, laid out information from the standpoint of the investor, looking at companies and how to enter the DOOH space. These articles discussed some of the different strategies available, including Terk’s strategy of finding an established company and altering some aspects to make it a digital signage company.

Terk lays out what investors are looking for across any industry: “you’re looking for a great concept, entrepreneurial talent, a business model, some customer development plan that seems to make sense, and a model that can scale and is repeatable.” It is the same for digital signage and DOOH companies. The reference to scalability is something that can be heard frequently around the DOOH industry, for it is the key to achieving a revenue stream that can turn a profit.

Yet investing is not a one-way medium, it goes back and forth, and it is important to understand how to successfully raise capital, and how to define what success is for the entrepreneur. According to Terk, “there are a number of companies that have been successful [in the DOOH space] in penetrating the market, but we are not sure of the financial success of the entrepreneurs that have started them up. It goes back to the definition of success in an investment environment.”

Terk points to the earlier days of the industry where investors flocked to ad-based DOOH models. “Early on, most business models were related to advertising, just like they were online, but it’s a more complicated revenue versus return relationship when you’re building a capital intensive digital network with a physical presence in bricks and mortar locations. Most investment made on the promise of advertising failed, and that’s hurt the ability of the industry to attract investment now, even though technology costs have come down substantially and more suitable business models have come to market.“

“There have not been too many exits with all cash buyouts; some mergers have occurred, but there isn’t a lot of information on the metrics behind how the founding entrepreneurs did,” explains Terk. This is where he dives into the definition of success in an entrepreneurial environment. “Generally, in an industry like this, in most cases, the entrepreneurs have been diluted very significantly when they raise tens of millions of dollars during start-up and growth phases. The company may have become a success in the marketplace, but how did the entrepreneur who founded it do financially, and/or even the early stage investors for that matter? “Success” is relative to each stakeholder’s goals and perspective. ”

Companies looking for investors live and die by their valuation, which, when not all the data in the industry are available (until more companies are floated publicly), requires some comparative mathematics to define. Terk states “if you do look at the private transactions that have begun to take place, you can compare relative to others what your company might be worth. There are a number of companies that have raised multiple rounds of capital; it can give you an idea of how much you can obtain by looking at the information those companies have disclosed, such as sales, customers, number of locations, etc., on a relative basis.”

Essentially, “there are different levels of risk for investment and working capital; a company that has already piloted, for example, will likely have a greater valuation than one which is in conception mode. If you haven’t piloted yet, that’s a different risk factor, hence, in general, you’ll receive a lower valuation. Once you’ve got revenue, you’ve got some traction and investors will be able to place more value on your sales pipeline.”

Terk provides some parting advice about the strategy for raising money. “If you think your business is worth $10 million and you need $3 million, you’re going to sell 30% of the company on a pre-money valuation basis. You make your pitch to investors, and find you are getting offers for $3 million but only on a $5 million valuation, representing 60% dilution. Do you still seek the $3 million or try to raise $1 million instead, only diluting 20% at this stage, with the goal of trying to get your company to the next important milestone, creating the higher valuation that you were seeking. It’s a balance between what’s truly required to develop the business, dilution and the entrepreneur’s motivation, which is important to investors as well. If you dilute the founding entrepreneur’s ownership too much early on, they may lose their desire to build the company. So sometimes it’s more advantageous to break your business plan down into smaller steps within a longer term vision to incrementally create value and minimize dilution.”

In short, the strategy for raising working capital and growing a company to success is just as fundamental as having a well thought-out technology and communications strategy to sell to customers. Equity expert Bob Burtis recommends enlisting a specialist to help to package the company, which, in the DOOH space, is proving nearly as important as the products DOOH companies are selling.

LARGO, Florida (June 16, 2011) – DOOH.com’s Original Articles by Tony Hymes (Editor) – Multiple Strategies for DOOH Investing.

The path to attaining investment and financing for digital out of home projects and companies themselves is a two way street that sometimes resembles rush hour in Los Angeles. According to Ira Terk, CEO of UR-Channel, featured in our first article and anchor to this series on DOOH Investing, one of the realities of digital out of home is the long sales cycle. This lengthy sales cycle, combined with high technology costs, mean that investors need to understand that it will take a while before they start to see the return on their money.

Terk lays out what investors are looking for across any industry: “you’re looking for a great concept, entrepreneurial talent, a business model, some customer development plan that seems to make sense, and a model that can scale and is repeatable.” It is the same for digital signage and DOOH companies. The reference to scalability is something that can be heard frequently around the DOOH industry, for it is the key to achieving a revenue stream that can turn a profit.

“If you follow media plays, you see Facebook, Twitter, Linkedin, Groupon, things that have mass appeal and can scale very, very quickly – that’s what’s attracting investor dollars.” Terk juxtaposes this with digital signage, “the sales cycle is long, with relatively large deployment costs for the customer; it’s a more difficult sell to an investor because of the timeline to an ROI.” Additionally, “one of the other angles that you look at; it has been difficult to find a standardized, concise way to show what ROI might look like for the customer, and to prove that out really is what drives the sale of the network and media in the first place.”

Terk points to the earlier days of the industry where investors flocked to ad-based DOOH models. “Early on, most business models were related to advertising, just like they were online, but it’s a more complicated revenue versus return relationship when you’re building a capital intensive digital network with a physical presence in bricks and mortar locations. Most investment made on the promise of advertising failed, and that’s hurt the ability of the industry to attract investment now, even though technology costs have come down substantially and more suitable business models have come to market.“

”The prospects for the industry are great,“ he continues, ”as the right parties have begun getting together to put something that is ultimately viable in front of customers. One of the reasons might be, in terms of in-store applications, there is a realization that in the end this is a marketing and merchandising play for them, more than it is about technology and third party advertising. What’s going to attract investors are businesses that demonstrate a strong value proposition incorporating the technology, but more importantly, management that understands how to use media and content with that technology to create a more compelling experience for the consumer.“

LARGO, Florida (June 9, 2011) – DOOH.com’s Original Articles by Tony Hymes (Editor) – Multiple Strategies for DOOH Investing.

All of the buzz around DOOH has been attracting a lot of eyes from international and domestic investors looking to find target companies to acquire and/or grow. It is important that the different stages of investing are understood by the executives of these digital out of home companies to maximize their chances of success and to achieve their goals.

Generating success in digital out of home from a pure start up position is extraordinarily challenging, says Ira Terk, CEO of UR-Channel, a corporate broadcasting and digital signage group based in Toronto, Canada. He prefers a different strategy for obtaining revenue and growth from DOOH.

As a private equity investor, he always had an interest in media. He started to look at digital signage companies to get involved with after learning about the power and potential of the nascent communications medium. “I wanted to focus on the last frontier for reaching the consumer that I felt was very underdeveloped given rapidly evolving technology, like retail environments. Digital signage is really just recently starting to pick up traction in that territory.”

Having to choose between pure digital signage start ups or other established companies already involved in related media distribution, he elected the latter. “A lot of companies that are start ups know very little about producing and building out a media broadcast network that can scale to hundreds or thousands of locations; we’ve been doing that for 30 years.”

BTV+, the company that was acquired and renamed UR-Channel, had already built out genuine turnkey network and content production platforms allowing corporations, including some of the largest retailers in North America, to broadcast information to their employees, such as for staff training. It was in fact digital signage in its earliest form. “It was relatively easier to deploy a digital signage network, leveraging off of the experience and knowledge the company had with training and corporate messaging. The screens are back end facing, and the content is naturally different. But the network infrastructure is very similar to digital signage.”

With 30 years of existence, the expansion into the digital signage market was a natural extension of the business. “We already had a platform, already dealt with some of the biggest Canadian retailers, already had the infrastructure; it wasn’t really that difficult to layer on another form of video content.”

From the precarious position of the vc investor, Terk notes that finding a group with an established revenue stream can be a safer bet requiring far less capital than a start up, “I didn’t need to keep going to investors to get more and more funding to develop the company.”

Look for two more articles to come in our “Multiple Strategies for DOOH Investing” series featuring Ira Terk to learn about how investing works both ways, from investor to company and from company to investor.

MIAMI, Florida (February 2, 2011) – The 2010 Excellence in Enterprise Video Award (EEVA), through Interactive Media Strategies was awarded to General Motors.

“BTV+ (UR-Channel Multimedia Organization) played a key role in our transition from satellite to the internet for training content delivery. Partnering with BTV+ improved operational efficiencies, created a great end user experience and drove business value across the organization. We were very pleased to partner with such a capable team and organization.”

About The EEVA Awards:

The EEVA awards program is designed to highlight organizations and industry thought leaders that are innovating in the use of online video to improve business processes, reduce costs, generate revenues and expand reach to new audiences. Visit Interactive Media Strategies to learn more.

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