Channel 4 to invest advertising worth millions in ‘overlooked’ UK founders

Channel 4 has announced plans to invest millions of pounds worth of advertising in business founders it views as overlooked and underrepresented, as it shrugs off concerns about a TV advertising slump.

Channel 4 Ventures, the broadcaster’s investment arm, said the launch of its new initiative Untapped is the first of its kind in the industry.

It plans to commit a significant proportion of its investment into growing companies led by entrepreneurs with more diverse profiles, including gender, education, socio-economic background, race, employment history and location.

This will be achieved by a new framework which it said will determine founders’ profiles across a range of criteria.

Founders securing significant investment have been predominantly men from top universities, analysis by Channel 4 Ventures found.

The fund uses a media-for-equity model, which means it offers start-ups advertising space on Channel 4, both on TV and its streaming platform, in return for an equity stake in the company.

At the end of 2022, it had about 20 active investments worth £45 million.

The company said it was deliberately not putting in place a specific target for working with founders from a broader range of profiles, so as to avoid a “token” approach.

But the proportion of investment could range between 10% and 60% and amount to millions of pounds worth of advertising space.

Verica Djurdjevic, Channel 4’s chief revenue officer, said TV advertising remains “very appealing” for businesses who want to grow and generate strong returns on investment.

“While audience behaviours are shifting and we’re seeing some decline, actually the mass reach available within linear TV advertising is incomparable to other media channels,” she said.

It comes after Channel 4’s chief executive Alex Mahon warned last month of a “sharp and protracted advertising slowdown that has hit the whole industry”, as it planned a new wave of job cuts.

The broadcaster said it wants to start generating more money from digital advertising revenues as part of a push to grow its streaming services.

Channel 4 Ventures has backed firms including Oddbox, Pinterest and Carwow since launching eight years ago, and re-invests the returns it makes into Channel 4.

Meanwhile, its analysis of the profiles of hundreds of entrepreneurs that have secured a valuation of more than £100 million for their business found that they are coming from a narrow section of society.

Some 94% of founders were men, despite men representing 41% of all UK graduates.

The founders were 51 times more likely to have graduated from an Oxbridge university or US equivalent than from a university outside the top 100 globally.

And they were ten times more likely to be a white university graduate than a black graduate, the analysis showed.

Vinay Solanki, head of Channel 4 Ventures, said: “The data implies that a wide range of talented founders leading attractive commercial organisations are being overlooked by the current ecosystem and we are committed to identifying and backing them.

“More broadly, Untapped can be a catalyst to grow the UK consumer investment landscape and encourage others to follow in the investment space.”