Innova looks to internet leaders
Internet start-ups are continuing to capture the attention of venture capitalists.
Innova Capital, a private equity firm based in Warsaw and one of the leading internet investors in the region, is to announce this week plans to invest $2 million in AMG.net, a four-year-old internet integrator based in Lodz.
"It's going to be the largest injection of funds in a Polish internet company to date," said Jacek Ciszewski, head of public relations at AMG.net.
"We chose Innova from among 15 firms because it deals with the kind of business we're in, has experience, and can provide know-how," he said.
Innova Capital manages two funds: Poland Partners, a $63 million fund started in 1994 and Innova 98, one of Innova's first and most successful deals. In 1996, Innova together with Advent International invested $4 million in TV broadcaster @Entertainment (purchased by Amsterdam-based United-Pan Europe Communications), which delivered a 42% investment return.
Rafal Nowakowski, a partner at Innova and in charge of internet investments, said the company could increase its investment in AMG.net. "The deal is that right now we're investing $2 million but we could provide further capital injections if the company needed them," he said.
AMG.net, Nowakowski said, is one of the two largest Polish companies of its kind. "Young and flexible, they're entering e-solutions business from a different angle, if you compare them to the big players," he said. "They started with creative internet services and now they're reaching their clients through e-marketing and e-consulting. It's a new generation of firms, like the foreign Razorfish."
AMG.net began at the end of 1996 and its first chief client was Lodz's municipal authorities. Today, it's specializing in e-business services, designing web sites and creating internet strategies for firms. Over the last three years it's been growing dynamically. "We triple our turnover every year," Ciszewski said. "And the number of employees doubles almost every year. By the end of this year we will have a staff 60."
AMG.net's clients include Telekomunikacja Polska (TPSA), IBM Polska, PricewaterhouseCoopers and TC Debica.
"Young as they are, they have an impressive list of clients and are focused on quality, which is rare in such new companies," Nowakowski said. "We think that AMG.net is a good base on which to build a professional company providing complex e-solutions to corporate clients."
Media budget planners still suffering from poor research data may soon find the right stuff. Under an agreement signed last week with the Polish Outdoor Advertising Study (PBRZ), a group of three outdoor ad companies established to finance market research, market research company SMG/KRC Poland Media will conduct complex research of outdoor advertising in Poland's 10 largest cities. "It will cost us approximately $500,000," said Marcin Grabowski, PBRZ board president. SMG/KRC will conduct research on 23,000 billboards belonging to PBRZ's three members: AMS, Outdoor and Plakanda. "We have 53,000 billboards in Poland with 33,000 in the 10 largest cities," Grabowski said. "But I know that Europlakat and Town & City are also interested in joining us."
Prior to its agreement with SMG/KRC, PBRZ was negotiating with two other market research institutes, OBOP and GfK. "It took us a year because we had problems choosing the right company and accepting a methodology," he said.
Janusz Matuszewski, manager of the outdoor ad research project at SMG/KRC, said they will use two research methods: Ovim, which involves classifying outdoor ads according to their quality, and Cita, which identifies the audience for outdoor ads. SMG/KRC plans to collect information comparable to TV viewership or radio listenership. "If you want to know whether outdoor ads are competitive with radio and television advertising, you need to use the same kind of measures," Matuszewski said. According to him, instead of stopping people on the street and asking them what they remember about a particular ad, SMG/KRC will measure how many people actually pass a given billboard and how long they look at it.
While the Ovim method is based on an Austrian system, Cita is the brainchild of SMG/KRC. "Our respondents will get receivers that will register their movements around their city, then they will answer our detailed questionnaires," Matuszewski said. "We'll get a continually updated picture of what kind of people go where." The new method will allow outdoor companies to classify billboards according to their effectiveness. "They will also be able to organize campaigns to reach specific target groups," Matuszewski said.
TVN, one of the country's largest private television broadcasters, could overtake public broadcaster Telewizja Polska (TVP) as the No. 1 news channel if it succeeds in its plans to create TVN24, a 24-hour news program. ITI Holdings, which is listed on the Luxembourg Stock Exchange and holds a 67% stake in TVN, plans to invest $20 million in the fledging channel. "It's what we need to get the channel up and running," said Andrzej Soltysik, TVN's spokesman. "As far as actually launching the channel, we're waiting for the right moment." According to market insiders, that could be as late as the first half of next year. TVN24 would be broadcast via the Wizja TV digital platform and cable networks. While TVN has been in talks with broadcasters CNN, BBC and BskyB, the station is developing the channel on its own, Soltysik said. "It might well be that we'll launch the channel, show that we're able to do it and then others will join us," he said. And TVN24 could have dozens of reporters and researchers available to work for the channel since "Fakty regionalne," TVN's regional news programs, were recently cancelled.
"We have far better capacity to create such a channel than TVN," said Janusz Cieliszak, TVP's spokesman. TVP has Telewizyjna Agencja Informacyjna, an internal news agency, which prepares its news programs and the content of the web site. But the point is, according to TVP's official owner, the treasury minister, that the public broadcaster cannot make such strategic decisions on its own.
"The minister said that we can't do it in light of the television and radio bill, so the issue is being investigated," Cieliszak said. "Like BBC's president said, news channels are the future of TV, there is no other way, we have to do it."
