The people behind the money

The cap tables of Europe’s viable independent outlets bear little resemblance to a conventional investment market.

They contain six software millionaires who were angry. An industrial wax manufacturer with his own business plan. Three brothers who are also the landlords. Forty friends in a purpose-built vehicle. A world-class media executive whose name changed how the market saw the startup. A consultancy paid in shares because there was no cash to pay it in fees.

The capital that founded Europe’s viable independent outlets did not come from the capital markets but from individuals, with specific fortunes, beliefs, grievances and attachments. From people who mostly assumed the money was gone the moment they wired it.

Six types of investors

Across twenty-one outlets, founding-stage and early capital came from six sources. Most outlets combined two or three; almost none relied on one.

These categories are not all mutually exclusive. A media professional may also be a wealthy private investor. A foundation may behave like a shareholder, a grant-maker or both. But different forms of capital (and we are again using our loose definition of capital) came with different motivations, capabilities and risks.

Venture capital is essentially absent. In twenty-one cap tables, the study found exactly one named institutional VC, Odyssée Venture, which joined Mediapart’s 2009 round a year after launch, in what was effectively a rescue. Professional financial capital looked at founding-stage journalism and, with one partial exception, said: “No, thank you.”

From code to capital

A lot of the money deployed for journalism was made in technology.

For Denník N, six co-owners of the cybersecurity company ESET acquired 51 percent of the publisher in 2015. Both the company and the investors stressed that this was not an ESET investment, but a personal decision by six individuals who happened to own ESET. As we’ll learn by the end of this chapter, while that distinction was legally real, politically it proved completely useless.

According to Denník N co-founder Tomáš Bella, these investors were not searching for media assets; they were upset. They saw a group of respected journalists threatened by the takeover of their newspaper and wanted to help. Each was tired of being asked for money by everyone and their cats, so what they wanted from Denník N was not a conventional return projection, but evidence that the founders intended to build a profitable company rather than return every year for another donation.

Follow the Money’s early capital came partly from wealth created through an IT consultancy. Zetland’s lead investor was a technology entrepreneur attracted initially by the company’s live journalism. In each case, it was the personal decision of the principal rather than some institutional strategy that led to the investment. These funders were persuaded by a particular founder, a crisis or an appealing product.

People who already understood the business

The second group consisted of journalists, media executives and other industry insiders investing in people whose work they already understood.

elDiario.es founders held most of the equity, and many of the people described as investors were themselves journalists. OKO.press was established by veterans of Poland’s independent press, with working capital also supplied through existing media organizations. Mill Media brought former New York Times chief and BBC director general Mark Thompson into its shareholder group.

These investors knew enough about journalism to understand both its importance and its unattractive economics. They did not have to be taught why editorial independence mattered, why audience trust took time to build or why rapid cost-cutting could destroy the product they were financing.

Old money, local money and the geography of relationships

Older industrial, property and family fortunes appear particularly often in the DACH region.

Republik’s backers included real-estate and family-business wealth. Some of the relationships were also physical: investors connected to the property in which the newsroom operated. CORRECTIV’s location in Essen was inseparable from its relationship with the Brost-Stiftung, a foundation endowed with the private fortune (and inheritance) of the wife of the WAZ newspaper group’s founder, who later on became the publisher herself. Mediapart’s early shareholders included businesspeople investing through their personal vehicles. Zetland combined technology wealth with capital originating in a family tobacco business.

These investors were often recruited through dense local networks rather than open fundraising processes. The founder knew somebody, who knew somebody, who believed the city or country should have a particular institution. Capital followed relationships, and those relationships sometimes shaped where the organization was built.

Institutional money arrives later

Mission-driven institutional capital is the category most similar to professional investment and for this very reason the type of capital mostly unavailable at startup.

Pluralis, an MDIF-managed investment vehicle, backed Telegram years after its launch. Stichting Democratie en Media acquired a special share in De Correspondent after the company had already established itself. CORRECTIV attracted support from international foundations after demonstrating its model. The Alternative Bank Schweiz innovation fund backed Tsüri; the Dutch Journalism Fund (SVDJ) loaned money to Follow the Money.

These institutions generally arrived after a lot of the fundamental risk had already been absorbed by founders, readers, wealthy individuals or existing media institutions at or near launch.

The “crowd” is different investors

Crowdfunding is often treated as a single category, but it can actually behave as very different instruments.

Most of what this cohort calls crowdfunding is revenue behaving like launch capital. De Correspondent, Krautreporter, Denník N and El Orden Mundial sold access to journalism that did not fully exist yet, raising working capital and showing proof of demand in one fell swoop.

Only in very few cases did the crowd become owners. Krautreporter’s cooperative gives every co-op member (not the same as subscriber) one vote; Republik combined equity crowdfunding with subordinated loans. A campaign is not community ownership just because many people paid into it. And where the crowd really does own, a cooperative with hundreds of small shareholders, the governance and administrative burden is permanent. One member, one vote may be an appealing value statement, but it is also an operating constraint.

The zeitgeist is also changing. The sample’s most spectacular campaigns ran a decade or more ago, when crowdfunding was itself novel, running one was newsworthy, and the format generated its own attention. That era is now largely over. A campaign today competes in a crowded field where the mechanism excites nobody, and recent launches in wealthy, conservative European markets have struggled to hit numbers that would have been routine in 2014.

Additionally, campaigns consume money, not just founder time. One serially expanding outlet told us plainly: “A lot of people think a crowdfunding campaign is something you just do. Absolutely not. It’s very expensive.” In its first expansion, the campaign target was 5,000 new members and it reached 9,500. In the next, the target was 5,000 and it reached 5,100, and the cost of running the campaign consumed close to everything it raised. The founders considered that acceptable, because the campaign was less a financing instrument than a market test and a hype engine: had it missed the target, they would not have launched. Spending a euro to raise a euro can be rational, if what you are buying is proof of demand.

When the investment is not money

Some of the most consequential shareholders contributed very little cash.

Brief Media’s founding group was constructed around core capabilities. One founder understood finance, another brought design through the agency Upian, another technology, and the fourth editorial knowledge. Their combined cash contribution was around €1,000. The cap table was a method for assembling the team the founders could not otherwise afford.

Tsüri’s anchor investor helped with its digital infrastructure, business model and office space before also becoming a paid supplier. El Orden Mundial gave a small equity stake to a programmatic advertising specialist and a media advisor because it could not pay their fees. De Correspondent included its design agency, Momkai, among its founders.

These cases expand the definition of an investor. In an early-stage publishing company, a product, technology or commercial capability may be more valuable than an additional amount of runway. Equity can be used to acquire that capability when cash is scarce. But the arrangement can also become a long-term liability: a stake granted cheaply at the outset may later prove complicated and expensive to unwind, as we’ll describe later, in our chapter about exits.

Why they said yes

Investor motivations largely mirrored those of the founders themselves and usually combined three elements.

The first was dissatisfaction with the existing market. Investors saw sectors that were compromised, dominated by incumbents or driven by low-quality, click-based journalism, and wanted a credible alternative to exist.

The second was founder gravity. They backed people whose reputations and vision made an uncertain venture believable. Edwy Plenel at Mediapart, the founding trio at Denník N, the duo behind Magyar Jeti and CORRECTIV’s David Schraven were all well-known, trusted figures in their respective media industries who combined personal authority with a convincing plan.

The third was external pressure. Political interference and hostile ownership changes created urgency and sometimes made investment a form of protection. This shaped the creation or financing of Denník N, OKO.press and 444, while Telegram sought an international investor partly as insulation against future pressure.

These motivations were neither exclusive nor primarily financial. Investors often backed the founder, rejected the existing market and wanted to protect the alternative, all at once.

What the right investors brought

Across every outlet that had outside investors, the survey statement “having the right investors or funding partners materially improved our chances of success” scored four or five out of five.

Validation

“When people found out that Mark Thompson had invested,” Joshi Herrmann, founder of the Mill Media group, told us, “people were like: oh, these guys are really serious.” Telegram’s Pavić gives Pluralis the top score for the same reason: the network, the advisory, and the seal of approval of a major international fund.

Strategic perspective

Zetland’s investors contributed materially at board level on product-building and optimization; early investor pressure to fund technology is part of why the company avoided growth bottlenecks.

Discipline, sometimes uncomfortable

Follow the Money’s wax-fortune investor wrote his own business plan for the organization and made his money conditional on hiring a publisher. Some of their other investors were cost-obsessed and insisted on open-source tooling.

Cover in a crisis

Asked when his investors mattered most, during slow growth, or a crisis, Mill Media’s Joshi Herrmann did not hesitate: the SLAPP lawsuits. Slow growth is a challenge he enjoys and the newsroom rallies around. What he wanted from investors was the moments “when you’re really under the cosh”: people with skin in the game, who believe in the project, in the room when the existential threat arrives.

Deliberate absence

Denník N’s ESET investors held formal governance rights but deliberately left the founders to run the company. Gábor Kardos, Magyar Jeti’s CEO, described the same restraint as a crucial advantage at 444: both its early lenders and, later, MDIF provided capital without seeking to influence the operation or the journalism. Sometimes the most valuable contribution an investor makes is a credible commitment not to interfere.

What it cost them

We began with Denník N, which got backed by six individual owners of ESET, not by ESET itself, so let’s return there for a moment.

Before they signed, Tomáš Bella told the six investors exactly what would happen. Friends and business contacts would call to complain about coverage. Politicians would demand that they intervene because they were the owners. They would have no editorial power, but they would still receive the blame. Their response was essentially: put every protection you want into the contract and we will sign it.

Then the calls and political attacks came anyway. The prime minister held press conferences about them. Because the same six people owned a software company worth more than a billion euros, ESET itself came under sustained pressure over an investment it had never made.

Despite all of this, the most visible of the original group of investors, ESET’s chief executive, remained the most committed: Bella summarized his position as, “I love this. I was so happy I started it. I’ll never leave unless you want me to - and I’m fine to suffer.”

That type of cost has a chilling effect on both sides.

Telegram’s Miran Pavić described interest from wealthy technology entrepreneurs but worried that they might ultimately seek influence or power. At the same time, credible investors may avoid journalism because even a genuinely hands-off investment will be portrayed as an attempt to purchase influence.