A few years ago, when we set up Ezaro Media, I had a vision of combining advisory activities --the 'sources' side of the business-- with making selected investments in a number of promising tech start-ups, based in Spain mainly --the 'uses' side of the business--.
That initial vision has suffered two key adjustments since.
Firstly, in connection with the type of advisory mandates pursued. The tech/internet early stage scene in Spain is not really in a position to support sustainable advisory business models around it. There are a number of factors explaining it. Apart from the general underdeveloped advisory culture, which has historically favored less professional agenda sharing powerbroker offerings, two other ones deserve highlighting: on the one hand, potential clients are very small and dramatically cash strapped. On the other hand, the value added perceived is limited, since finance providers are few and not overly keen in dealing with intermediaries.
Secondly, the fragility of the ecosystem advises against making small minority investments with somewhat random accompaniment. Investments that do not take a significant percentage of the equity in the target company run a severe risk of developing non-performance related issues, such as less access to operational information and unfavorable treatment in future rounds down the line. The legislative framework is not particularly helpful in this regard, so unless investors are willing to lead rounds with considerable capital per investment, our experience indicates that they better be prepared to take on a more entrepreneural role in the venture, as opposed to a purely financial one.
So, today, Ezaro Media has abandoned the pursuit of early stage advisory mandates, focusing on carrying out transactions for larger and more consolidated corporate clients. Additionally, the investment transactions considered have to be ready to take on a real partner from early on, as opposed to just another financial investor.
With these two adjustments it now appears that 2013 will be the company’s best year to date. We will see what the future holds.
PS: if you haven’t seen it yet, do watch Civio’s latest teaser.