Ad-Tech Mavens Back 'Founder-Friendly' Investment Syndicate

After a period in the doldrums during the mid-2010s, the number of mergers and acquisitions plus IPOs in ad tech suggests the good times are back. This time around, some of the sector’s more notable names are looking to fund the next generation of ad-tech and mar-tech companies as emerging channels. Looming over the proceedings, however, is the specter of increasing government scrutiny that could introduce further complexity to the space. First Party Capital, a recently launched investment syndicate, is positioning itself as a "founder-friendly" financing solution for early stage ad-tech and mar-tech startups, in particular those outside the U.S. Notable backers of the project include some of the industry’s biggest first-generation names who played seminal roles in building companies such as AdMeld, DoubleClick (both of which sold separately to Google for a collective $3.5 billion) and Mediaocean: Ari Paparo, formerly CEO of BeesWax, now part of ComcastMike Baker, formerly CEO of DataXu, now part of RokuBen Barokas, CEO of SourcepointJT Batson, CEO of Hudson MXJoe Zawadski, CEO of MediaMath These luminaries are on hand to dispense both angel investments and strategic guidance to beneficiaries of the syndicate, which aims to offer entrepreneurs an alternative to venture capital investors, many of whom cooled on the space as privacy legislation increasingly loomed large in recent years. Connecting U.S. investors with foreign companies First Party Capital is run by managing partner Rich Ashton, plus Ciaran O'Kane, CEO of WireCorp, and Kevin Flood, CEO of PowerLinks, who aim to position the syndicate as a bridge connecting U.S. investment with startups in both APAC and Europe, where differing market conditions have prompted early innovations. Paparo, head of partnerships and strategy at FreeWheel—the Comcast-owned outfit that recently bought his company—told Adweek that privacy legislation such as the EU's General Data Protection Regulations, introduced in 2018, has necessitated changes in Europe ahead of the U.S. market. “The pandemic accelerated behavior change around CTV, and there’s a lot of opportunity beyond ad tech and mar tech in banner ads in a browser,” he explained. "There's a lot of innovation around identity in Europe because it was hit with GDPR several years before privacy became as important in the rest of the world. So there were a lot more startups that spent time around alternatives to the typical third-party cookie, and that obviously translates directly into CTV and other areas." Typically, First Party Capital aims to invest up to $3 million in startups, with such opportunities purportedly open to the rank-and-file of the sector, not just well-coined luminaries of the space, according to O'Kane. Presently, there are more than 100 backers of First Party Capital, with O'Kane telling Adweek the rationale for launching such a fund now was partly driven by the recent glut of liquidity moments in the sector. "There's been big windfalls from M&A and IPOs in the space, and it's the same old people earning money from it," he said. "So why shouldn't there be an opportunity for ad-tech professionals to access some of these companies [as an investment opportunity] at an earlier stage?" Flood explained, "We want to focus on Europe and APAC from the startup perspective because there's less access to capital for those companies when it comes to VCs. ... [European investors] have yet to grasp the opportunity when it comes to that specialism." "It's no secret that generalist investors and VCs have pulled away from ad tech over the last five years, so it's exciting to speak to their needs," added Ashton. "We've had some conversations recently where companies say that it's great where they don't have to dumb down the conversation just to get an investor to understand them."