Eight years ago, the Belgian government decided to cut innovation funding for the Flemish public broadcaster VRT.
But the VRT, which serves more than 6 million Flemish voters, has since become a catalyst for European media innovation, running an accelerator, an international media innovation center and even its own seed fund.
Here’s how the broadcaster became a media innovation powerhouse.
Sandbox model of VRT
In 2014, “it was extremely difficult to walk through the door of a public broadcaster as a startup,” Peter De Paepe, head of VRT Sandbox – the broadcaster’s open innovation accelerator – told Sifted.
The VRT office was not a place you could walk into without knowing who to talk to. The broadcaster did not have a designated startup contact point, which made it difficult to introduce an innovation without it getting lost in bureaucracy.
Traditionally, the broadcaster had also built much of its technology in-house, but after funding was cut, it knew it had to do something to respond to the speed at which the media market was changing.
The result was VRT Sandbox, which was founded in 2014 and began as an innovation initiative for startups to test and refine their technologies alongside VRT’s media brands.
Sandbox is both an open innovation project and a kind of accelerator, where startups can work with the television, radio or online arms of VRT to integrate their technology into existing infrastructure or workflows. .
The goals of VRT Sandbox are twofold, says De Paepe: For startups participating in VRT Sandbox, to grow and create media jobs while helping VRT advance technology.
Its success was almost immediate. Sandbox won the 2016 IBC Innovation Award –– an industry award for technology innovation in media –– for a system for transmitting and directing live broadcasts over the Internet. The system was co-developed by the broadcaster with a range of partners including Axon, EVS, Tektronix and Trilogy.
Since its launch, VRT Sandbox has worked with over 100 startups, which have collectively raised over €50 million. Statistics from 2020 (just before the pandemic) indicate that the startups VRT Sandbox partnered with saw their workforce grow by 90%.
Be good at finding EU funding
When Sandbox was moving across Europe, De Paepe said two factors were key. First, the team traveled across the continent to identify media companies that could quickly launch their own version of Sandbox, and second, they learned how to write successful proposals for EU funding. They won one out of three funding proposals, De Paepe said.
These two factors led to the use of VRT Sandbox as a model for an EU-funded initiative called MediaRoad, which supported the creation of several “Sandboxes”. Public broadcasters like the BBC, France Television and Finland’s YLE have joined, as have commercial media companies like Mediahuis, DPG Media and Red Bull Media House.
The resulting Sandbox Hub was formed in 2018 by 20 founding members, with the aim of “building a network of media innovation accelerators, enabling local startups and SMEs to grow internationally and exchange experiences and expertise,” according to the project’s website.
International collaboration is strength
De Paepe says the teams in charge of their respective incubators and accelerators meet once a month to share the challenges they face and the scale-ups they work with.
The network was also useful for the next step of VRT Sandbox: the creation of an EU-funded accelerator program for media innovation startups and scale-ups called STADIEM. It is run by a consortium of media organisations, including the European Broadcasting Union, Media City Bergen and UK-based startup platform F6s.
Participating startups are eligible for up to €150,000 in capital-free grants and are supported in finding co-creation media partners from the Sandbox Hub network. The class of 2021 gave rise to 12 co-creation projects between startups and European media companies.
One of them is the German startup The Chainless, which analyzes visual material and makes it searchable. He is currently working to make browsing the archives of German commercial broadcaster ProSiebenSat1 more accessible.
Another example is On-Hertz, a Brussels-based company that produces a distributed production platform for audio and video, and is working with French-speaking Belgian broadcaster RTBF to integrate it into their production backbone.
VRT is also spearheading MediaMotorEurope, an EU-funded mentoring and coaching program for media startups and scale-ups.
“I think we are seen as a trustworthy partner who can bring exciting new technologies,” says De Paepe. Other media agree with this view.
Thomas Seymat, head of editorial projects and development at Euronews, has been involved in discussions with several startups in the Sandbox Hub ecosystem.
He tells Sifted that “over the past two years, the Sandbox program has connected Euronews with several relevant startups from across Europe. This has led to some exciting networking opportunities and potential partnerships on cutting edge projects.
Seymat unfortunately could not say which startups they were considering, as negotiations are still ongoing.
Public Broadcaster Venture Capital Fund
This month, De Paepe was present at the Sandbox Hub meeting to present VRT’s latest development: Media Invest Vlaanderen (MIV), a VRT venture capital fund created in collaboration with PMV, an investment fund and loan belonging to the Flemish government. contractors.
Although there have been rumors that the BBC is considering a similar venture capital fund, VRT is the only public broadcaster actively investing in scale-ups.
“We were already attracting developers of new technologies and helping them scale, so participating in these ventures and potentially generating a new revenue stream was the obvious next step,” says De Paepe.
MIV invests in startups and scale-ups from Flanders and Brussels, with tickets between €250k and €1m. Since 2019, she has invested in three startups, all of which previously worked with VRT via Sandbox. The 10 million euro fund has three more deals in the pipeline.
As a publicly funded venture capital fund, it has some interesting advantages. De Paepe mentions that the Covid relief loans granted to Flemish media entrepreneurs by PMV during the pandemic include a clause that allows the loan to be converted into equity participation in MIV during a following investment round. The loan is convertible into equity at a value agreed in the original loan agreement.
“We are not primarily in the venture capital business to generate revenue. We are trying to solve a market failure.
De Paepe could not say how many companies were considering the option, but hinted that the fund may soon expand its portfolio.
“It’s important to note that we’re not primarily in the venture capital business to generate revenue,” says De Paepe, “we’re trying to solve a market failure.” He says that through their innovation model, his team noticed that many scale-ups that tested their MVP through Sandbox couldn’t find a player in the market to help them scale. “The funds were mostly risk averse, and that killed the scale-ups,” he says.
See how much real investment in public service media has decreased by 6.9% in Europe over the past five yearsinvesting in startups could be an interesting model for public broadcasters to follow.
VRT is far from the only media company to have a venture capital fund, but the combination of Sandbox, an accelerator and a European collaboration network gives the fund a head start for help startups with growth potential.
“One of the startups we work with is Web64, a company that builds a real-time semantic graph to monitor the spread and growth of ideas online,” says De Paepe. “Coupled with an artificial intelligence algorithm, the product helps journalists trace the sources of stories and tell if they might be misinformation.
“It’s still in the early stages of co-creation, but we’re using it internally. Now, once validated, will they sell this tool to other members of our network? Definitely.”
The collaborative nature of the Sandbox Hub enables European media companies, which are often a fraction of the size of their US counterparts, to co-develop technology that can compete with better-funded startups and scale-ups.
Sharing information on challenges faced and new technologies adopted helps network members stay relevant. And while De Paepe realizes that some members might just be interested in what the contest does, ultimately the main value is in knowledge sharing.
“The real challenge now is to keep it funded,” says De Paepe. EU funding for the STADIEM program runs until September 2023, so his team is already looking for new opportunities.
Dependence on public funding is both a strategic handicap – with the EU or local government able to refocus strategy or reduce funding – and a driver of innovation for public broadcasters like VRT. This forces an organization to be creative in finding funding.
And De Paepe says the model has the potential to broaden its sector focus. “We envision creating a digital innovation hub that is focused on the creative industry,” he says, “so not only focused on tech startups, but also on startups in the creative sector.”
Alejandro Tauber is a freelance tech and business writer based in Amsterdam. In the interest of full disclosure, the startup he previously worked at participated in the STADIEM program. He tweets from @AlejandroTauber