Adform, the Copenhagen-based ad-tech outfit, has announced an undisclosed funding-injection from private equity firm GRO Capital, just months after the company shelved earlier plans for an initial public offering. The timing of the announcement, which was made late last week, was within a week of Sizmek, a rival ad-tech outfit which likewise attempted to position itself as a full-stack alternative to walled gardens such as Facebook and Google, filing for voluntary bankruptcy.
Oliver Whitten, Adform’s COO, told Adweek the proceeds of GRO’s investment will be used to accelerate its global expansion both in terms of hiring in the North American market, fortifying its integrated stack, which includes an ad server, data management platform and demand-side platform–a tech stack similar to Sizmek’s.
“It’s a perfect timing for us to raise the funds, given that one of our largest competitors is facing a challenging time at the moment and we have a significant influx of potential clients and we want to use this investment to ensure that we deliver for them both in the near term and longer term,” he said.
In a statement, GRO Capital’s managing partner Lars Dybkjær noted how Adform’s roster of clients, including blue-chip advertisers plus larger media agencies, as well as its ad tech stack, made it an impressive investment opportunity that is aligned with its strategy of investing in late-stage companies.
The company’s new private equity backers are partnering with existing shareholder VIA equity and Adform management to help boost its expansion. This will involve Dybkjær and Lars Lunde, also a partner at GRO Capital, joining Adform’s board of directors, with the transaction expected to close by the end of April.
GRO Capital stepped in as an investor after Adform shelved plans to fundraise via an IPO in the latter part of 2018 with the Denmark-based company citing the stock market volatility that marked the end of 2018—which negatively affected tech prices—as the reason for this reversal.
“It’s about continuing to bring to market the broadest, independent ad platform in the world … so a lot of it will be about innovating new features and ensuring that we have the richest integration between data workflows, creative workflows and trading workflows,” Whitten said.
Whitten further went on to add that while Adform does keep an open mind when it comes to potential inorganic growth opportunities it was unlikely the newly acquired funds would be used to purchase ad tech. But this is unlikely a strategy that Adform will attempt to replicate.
“We actually feel that one of our strengths is that we are built on an organic code base,” he said. “The fact that we have a single platform has allowed us to develop new features quickly and that’s been the contrast with some of the other businesses out there.”
The ad-tech sector has undergone a rapid phase of market consolidation in recent years with industry observers often keen to cite Sizmek, an ad-tech company backed by private equity firms Vector Capital and Cerebrus, as a prime example of attempts to weave together point solutions.
Sizmek’s Chapter 11 filings have revealed that it was indebted to sell-side ad-tech companies with a number of outfits owed several million dollars and are ongoing with a case management hearing scheduled for May 7.
Some industry observers have speculated as to whether the eventual conclusion of the proceedings will include a piecemeal sale of Sizmek assets, for which its ad server component would likely prove a key attraction given that it is widely regarded as a credible alternative to Google’s equivalent.
Whitten later went on to explain to Adweek how it deemed its own ad server was “a strategic asset” to Adform and one that it would hope to capitalize on as it sought to accelerate its presence in the North American market as well as further afield.
“We believe we’ve innovated and brought to market is something much broader,” he said. “We think what’s differentiated is having a seamless, integrated workflow across all three components [of creative, data and trading].”
However, one area where Adform’s message to market will match with Sizmek’s is how it intends to position itself as a scaled counterbalance to Google’s ad stack.
“We feel highly differentiated … as being a scaled a scaled global independent alternative to Google,” said Whitten. “And we certainly see that there’s a lot of desire from our clients who want to de-risk from having all their eggs in the Google basket.”