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European Ad Tech For The Win; MadTechMoney Ticket News
What The Scibids Exit Means For Ad Tech Investors
The M&A market appears to be thawing. This week DoubleVerify announced that it was acquiring Scibids for $125 million in cash and stock.
FPC wants to congratulate Rémi Lemonnier and team for not only successfully building a new category in ad tech (AI Advertising) but also achieving a well deserved liquidity event.
To say it’s been a lean year would be an understatement. The French ad tech scene has contributed around $500 million to M&A activity in Europe in 2023 (Equativ weighed in with a $375 million deal earlier in the year) .
But this deal is a positive development for the industry - as it points to more M&A activity in the second half of this year.
Let’s look at the takeaways from this deal and how it benefits our portfolio and LPs:
A tasty valuation: Before the Scibids deal multiples on SaaS revenue were hovering at about 5-6x - and a bit lower on mixed SaaS (!) and media businesses. Based on what DoubleVerify CFO, Nicola Allais, said on earnings call Scibids will likely do $15–$17 million in 2024 (based on a 30%–40% YOY growth rate). Scibids is probably doing between $10 and $12 million net revenue, implying a multiple between 10 and 12 on top line. Obviously, there is a strategic premium being paid here by DoubleVerify - mostly based on Scibids’ tech platform. The good news for investors (looking at you FPC LPs) is that buyers are prepared to pay 10x multiples as long as the company has strategic value.
We’re all data businesses now: IAS and DV own the ad verification market. You have to work with one or the other (or both in some cases). They both have sizeable market caps: IAS, $3 billion; DV, $5.6 billion. They need to grow. And ad verification revenue growth is slowing. This is the reason that both are moving into activation. IAS and DV have big contextual businesses, selling segments to buyers. Neither are verification companies. They are big data businesses. Both are hungry for signals they can ingest and process, feeding programmatic buying. This means that they will be highly acquisitive going forward. Great news for our portfolio companies as they grow to dominate new areas of ad tech like privacy, attention, DE&I and sustainability.
Almighty scrap for attention: Attention will become a key battle ground for ad tech as we get closer to 3PC deprecation day (September 31, 2024). The loss of this signal will batter the industry. Legacy ad tech is unprepared - as are buyers. Attention will fill this void. DV and IAS are well aware of the opportunity. DV is hitching its wagon to a probabilistic form of attention based on assumptions. IAS has WISELY opted to build its attention solution on top of modelled data - and proper tech. And who is providing that platform? Yes, readers, you guessed it: it’s Lumen. Once attention is designated as needing to be modelled on real human data, Lumen will be the go-to for all in the industry. FPC is sure there will be multiple winners in this burgeoning ad tech category; it’s just that we are backing the best in the game. By the way, there is still time to invest in the Lumen syndicate round (we have raised £750K GBP from the syndicate to date).
MadTechMoney Ticket News
We will be hosting our MadTech Money event on Oct 31, 2023. We already have a few early speakers confirmed, including the likes of Joe Zawadzki, Lara O’Reilly and Arnaud Creput.
We will have a full line up and firmed-up agenda for you in the coming weeks.
In case you didn’t know what happens at the MadTechMoney event here’s a quick synopsis:
It is the only conference in the world that brings together ad tech/martech founders and the investment community (private equity, venture capital, corporate development and strategic investors).
From seed, to series A, to growth rounds, to exit, MadTechMoney examines the opportunities for start-ups to scale tech solutions in the soon-to-be $5-trillion-dollar marketing sector.
You can learn from the industry’s smartest and most influential capital allocators as they share their insights on the current investment landscape.
Last year we had over 200 attendees, and we are expecting an even bigger crowd this year.
There are a few updates to this year event on ticket pricing:
We have a general admissions tier, £250.
We also have a MadTech founders tier, £99.
Tickets are limited - so make sure you get yours today (link listed below).
Have a great weekend, readers.