Industry Shakeout: Exclusive Interview With Chris Riegel, STRATACACHE CEO

Chris Sheldrake

The digital out-of-home industry has seen some pretty seismic events these past months, and it looks like there will be more, not less, significant happenings going forward.

To help understand all of this and in fact to get a bit of an expert opinion, we spoke exclusively to Chris Riegel, STRATACACHE founder and CEO, to get his perspective on how the industry might shake out…


You announced your USD 25 million Strategic Acquisition Fund in the middle of September. Can you tell us a little bit more about the response you have had?

Chris Riegel:

We have had no fewer than 50 inquiries from companies in the digital signage ecosystem looking for an exit. While we were not surprised by the response (we knew that this was the ideal time and market condition to ride the consolidation wave), we were surprised by the roster of ‘big names’ in this industry looking for an exit.


How many of those folks have you engaged with?

Chris Riegel:

Of that group, we have engaged in a dialog with enough of them to have a very clear understanding of a fundamental shift taking place. While this shift is partly due to reality setting in to level-off the hype generated by this marketplace over the past 3 years when capital was cheap and easy, and little companies with big ideas generated much more smoke than fire, it is apparent that the ’bell is ringing’ for many firms, and (especially for companies in the U.S. & Canada that owe their existence to and have pledged their souls to VCs and the capital markets) the word CHANGE has a whole new meaning outside of the political sphere.


What catalysts do you see triggering this shift?

Chris Riegel:

From a financial point of view there are 6 things that we are really noticing…

  1. Many startups or early stage companies who relied on venture capital to grow are not able to raise money (at any cost) in this environment.
  2. Big customers are shell-shocked and large new projects/large new capital investments are on-hold until the financial markets settle down and customers see the light at the end of the tunnel.
  3. Many VC backed firms are seeing their patrons reverting to ‘bunker mode’ due to the overall U.S. financial crisis and their own capital calls, and are cutting their losses, refusing to fund new rounds for existing investments.
  4. The IPO market is non-existent and that won’t change for the next 18-24 months (best case).
  5. Public Companies (large and small) experiencing massive downward pressure on their stock are trying to limit their losses.
  6. Banks (especially in the U.S.) are starting to cut or call commercial credit lines, tightening the financing noose. This is not the death of the digital signage industry. In fact, it is a good and necessary ‘thinning of the herd’ which will separate capable entrepreneurs and operators from the gadflies that chase the latest hot sector.


How do you see this all playing out?

Chris Riegel:

There are some spectacular flameouts coming and lots of reshuffling about to take place, so be warned that your vendor partner today may have a different card (or no card at all) tomorrow.

In these conditions, cash is king, and there are wonderful opportunities for the true believers in this market to double down and come out the other side of this for the better. However, in the short term, it is going to be a VERY bumpy ride.


Thanks for your time.

4 Responses to “Industry Shakeout: Exclusive Interview With Chris Riegel, STRATACACHE CEO”

  1. J. Woolsey VMI Says:

    Eloquently stated Chris and spot on…

  2. June Hagman Says:

    He’s missing the elephant in the room.

    Ad sales, or lack thereof.

    As someone who is out there selling every single day, this new media is not the slam dunk, no-brainer that some slick websites

    It’s new, it doesn’t have a great tracking system, etc. It takes effort to sell it. My advertisers love it, but it has taken a lot of work to get them there…

    A lot of folks get hyped without making sure they are ready to do what it takes to sell it.

  3. Lyle Bunn Says:

    Well said Chris, while caution is responsible, optimism is warranted as well. This “cautious optimism” was reflected by the 40 investors attending the 3rd annual Strategy Institute’s DOOH Investors conference which I Chaired in New York Oct 7-8. They noted in particular the strength in the core value propositions of digital signage, its ability to deliver high ROI for communicators, the growing display investory and maturing in both ad sales and DOOH media planning/buying capabilities. Additionally, the Stratacache fund, recent $18M round completed by Enqii and numerous M&A transactions and smaller round ($2-6M) were cited as indicators of consistant and healthy growth in the sector. As investors are defined by “investing” and seek reliable and above average returns whatever the finacial weather, DOOH is seen as viable for investment consideration.

    Again Chris, excellent commentary and outlook.

  4. neil farr Says:

    Well said Chris. Most of this market is (as is the rest of industry) based upon a certain level of hype and optimism. Recently there have been a spate of ‘new boys on the block’ and underpricers, willing to just grab a market share at any cost, spinning on certain ‘new advances’ to confuse the customers into thinking they have got a good deal.

    Although unfortunate for the people involved, it is certainly time for a thinning-out of the players so that customers know who to trust (and who will be around tomorrow).

    Of course, as suppliers, we also need to be mindful of whether the customers will be around tomorrow. Digital Signage can be used for many things – NOT JUST ADVERTISING :) and still make and/or save money. Networks based upon a revenue derived from advertising models are going to find it hard going over the next few months as advertisers pull back (note even our own industry players are pulling out of ad deals!)… So as long as everyone (buyers and sellers) are confident, I think there will be a lot of win-win deals still being made – and often the longer players in the game will be able to stick it out (sellers who have invested in the technology, and have already built ongoing sales, and buyers who have existing locations/history for advertising OR don’t need revenue generation from this ‘new’ technology)

    I think it is not all ‘gloom and doom’ and overall I think the players with less hype around them will win in the end. Nice to see an article that is balanced :)

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