Passendo raises €2.3m to own email ad execution and measurement; The MadTech sector is properly "CRUSHING" it, obviously

This is the FirstPartyCapital weekly newsletter.  It covers news and updates about the FirstPartyCapital fund and its portfolio companies.

Boring Is Beautiful: Why Passendo Is Going To Own The Email Ad Serving Category

Our portfolio company, Passendo, raised €2.3m in a pre-series A round this week to help scale its email ad server stack. FirstPartyCapital was part of the round. This is an exciting time for the company, as it looks to own the email ad serving market.

Its competitive set is, shall we say, pretty thin on the ground. Google doesn’t care about product development around its ad server, preferring to funnel everyone in to the AdX black box so as to strip as much margin from clients (never trust Google - ever!). LiveIntent et al have gone all in on their hashed email identity solutions, hoping to cash in on the id lottery that is currently gripping legacy ad tech.

I hate to break it to them but those magical ticket numbers are never going to be drawn. You can thank Timmy Cook, GDPR and all sorts of privacy ambulance chasers for that. It seems the penny hasn’t quite dropped yet in ad tech that the id punchbowl is being forcibly taken away. As the stoics would profess: you can only control what you can control. Passendo is ignoring these siren calls, preferring instead to address a real problem in the industry that is not determined by outside forces.

We believe this company will have a very successful exit in time. And you know why? Because the most successful ad tech - and tech - businesses are boring. But boring in a good way. Boring companies are capital efficient. Boring companies are profitable. Boring companies command a big multiple on top line revenue, giving founders and investors a successful outcome. Boring is beautiful. We love boring at FirstPartyCapital.

By the way this wonderfully boring Passendo deal is live on our platform. Syndicate member can access it now. Let’s get investing, people.

MadTech Is A Stupidly Hot Vertical. Didn’t You Know?

We have been putting together some marketing material for non-industry LPs over the past week. It’s amazing to see how big our vertical has grown.

Below are some interesting charts on the total value of public companies and M&A activity in the sector. These charts are based on data gleaned from Luma Partner’s excellent quarterly industry report. If you are interested in learning more about Luma, this long-form profile piece by our good friend Lara O’Reilly on the great ad tech M&A maestro himself, Terry Kawaja, is well worth a read.

What do those chart tell us about the greatness of MadTech? Well, MadTech is pretty big: the total market cap of MadTech co’s is over half a trillion dollars. And M&A activity in the space is at an all-time high.

We at FirstPartyCapital believe this is only the start of a decade-long industry evolution, as we transition into a privacy-first era where tech enablement - not media arbitrage - will be the key USP for principle clients like marketers, agencies, consultancies and publishers. Come join us.

And Finally, A Little Bit Of Housekeeping Before The Break…

This will be the last FirstPartyCapital newsletter of 2021. We have come to the end of a long year. In 2022, we will be adding a little more to this newsletter, including open job roles and upcoming events at our portfolio companies. We also have some big news coming in early Jan, which will affect the 1000+ subscribers on this subscriber list - so stay tuned. We at FirstPartyCapital thank you for the continued support and belief in our project to fund the next wave of winners in our sector. We want to wish you all a pleasant holiday, Enjoy, and we will see you the other side, Stay lucky, and stay safe.