It’s The Margin, Stupid; Pixels Seed Round Nearly Gone; European Ad Tech M&A Hits $10 Billion
Greeting readers. It’s Thanksgiving week in the US, so it’s oh-so quiet in ad tech. Or is it? Let’s kick it off.
Curation: It’s The Margin, Stupid
FPC has read some guff about curation over the past few weeks. “It’s a technological step change for ad tech”. “The sell side is better than the buy side”. “This is a new age”. Riiight.
So let’s be honest here. Every major shift in ad tech has been motivated by economics. Curation is no different. This is, pure and simple, a scrap over margin. And it will get ugly because execution fees can only logically go one way: down.
That’s why we are big on Bedrock Platform. We want to empower the ad tech middle and give back the margin to the good people of ad tech - for additional working media, better publisher yield, or juicing your EBITDA.
We discuss this at length in this week’s edition of The FPC Podcast:
.
You can also educate yourself on buy-side curation by reading Shane Shevlin’s excellent two-part post: https://bedrockplatform.com/the-adtech-curation-landscape-1/.
Hurry - The Pixels Seed Round Is Nearly Oversubscribed
We have had tremendous interest in the Pixels funding round. As you know, Pixels is one of the stars of the FirstPartyCapital portfolio and is going nuclear next year.
We filled the £250k SEIS allocation in record time. The final tranche has had similar levels of intense interest. You need to move fast to get in.
The deal is live on our syndicate platform - https://investors.firstpartycapital.com/deal/detail/9fa71565-37f7-416e-9436-632399fdfc59.
Here are the reasons we are all on in the deal:
Pixels has built vRoll™ (vertical roll), a vertical video ad unit that we are calling “the TikTok-ification of the open web”. Its core objectives are to help publishers increase yield and deliver KPIs for advertisers.
Pixels is already making money, generating £500K ARR, and is poised to close the year with a $1M+ net revenue run rate, a testament to its potential for substantial growth.
Pixels is a game-changer, diverting funds from large walled gardens and excelling in performance - a boon for agencies seeking alternatives that can deliver superior performance and margin.
Pixels has built its proprietary stack, including a proprietary video player. It also has exclusive third-party video content partnerships and a real-time production platform to serve contextually relevant content to users.
Pixels has built its own AI (secret sauce) trained on trending news stories to help power recommendations and keep users engaged while in the vRoll™. The Pixels algorithm keeps users consuming quality content and ads.
For UK investors, this £200K tranche is completely EIS covered, giving you a 30% tax rebate on the investment and no CGT to pay if the shares are held for at least 3 years.
Pixels is a rising star in our portfolio, and this goes the distance - a US market entry beckons, with a decent exit to follow.
Boom: Hitting The $10 Billion M&A Mark
Nobody denies that the US is the king of ad tech. It’s got the largest ad market in the world. The collective value of publicly listing ad tech companies is over $200 billion. And it’s got the biggest deals. It’s a given.
Despite its chronic fragmentation, lack of VC interest, and woefully uninterested public market, it still holds its own. Over the past four years, we have seen over $10 billion in M&A transactions in European ad tech alone.
It's exciting for our investor base. The value created in Europe is incredible, considering the harsh conditions (versus the US).
There will be more deals, and we look forward to our portfolio companies joining the list.
Access the European M&A ad tech tracker here: https://docs.google.com/spreadsheets/d/19a2KrQPTiUO8WAnAQ4JEVoh8afuHyOuoTFT1GHfsTHA/edit?usp=sharing.
Short and sweet this week. Keep safe. And have a great ad tech day.