Communicating Value and Increasing Transparency: Internet / New Media

Posted by | March 16, 2011

There is no question that our lives today revolve around the Internet. Our daily interactions with the web and related new media are growing rapidly. Safeguard Scientifics continues to focus on this target segment, specifically on growth-stage businesses with recurring revenue and transaction enabling applications.

In Safeguard’s Technology Group, our Internet/New Media partner companies include Beyond.com, Bridgevine, MediaMath, Swap.com, and ThingWorx.

For this blog post, let’s focus specifically on MediaMath, one of our high-traction stage companies. Safeguard first deployed $6.7 million in MediaMath in July 2009, and subsequently provided $9 million in follow-on funding in February 2011, resulting in a 23% primary ownership position in the company. MediaMath’s revenue was up over 150% year-over-year in 2010 (versus 2009) and is expected to continue to grow rapidly in 2011, which we reported in Safeguard’s fourth quarter and year-end 2010 financial results.

Our decision to partner with MediaMath was driven by the fact that the company aligns with Safeguard’s core focus on deploying capital in growth-stage, entrepreneurial technology companies whose competitive advantage in their market represents a sizeable opportunity.

So, what are the analysts saying?

  • Ad Revenues — In its 2011 Internet Investment Guide “Nothing But Net” published on January 3, 2011, investment bank J.P. Morgan estimated that global graphical ad revenues will increase 14% in 2011 to $26.3 billion. The U.S. portion of that “spend” is estimated to be $10.2 billion, up 13% from 2009 revenue. Through 2014, both global and U.S. graphical ad revenues are projected to grow at compound annual rates of approximately 11% to $35 billion and $13 billion, respectively.  Internet advertising is more measurable and less expensive than traditional media, and is the only medium where marketers can reach consumers through the entire buying cycle from initial awareness to purchase to post-sale feedback.
  • M&A Activity — In its “Information Technology M&A Update” issued late last year, investment bank Signal Hill reported that M&A activity in 2010 increased significantly, driven by heightened deal volume, median deal size and worldwide IT services spending. Deal volume for the sector is expected to be even higher in 2011.
  • Enterprise Value — According to data gathered by Duff & Phelps as part of its “Internet Media Sector Overview” published late last year, publicly traded Internet Advertising companies carried average enterprise value / revenue multiples of 4x.

Why MediaMath?
MediaMath’s TerminalOne® is the first and only enterprise-class digital media buying data and reporting platform built for the industry’s most sophisticated advertisers. The company was first to market with its technology in 2007 and continues to build on its advantage. Today, MediaMath drives breakthrough results for dozens of agencies representing the world’s leading brands — including units within all 7 global agency holding companies – on thousands of worldwide campaigns.

Since Safeguard’s initial capital deployment, MediaMath has:

  • Released v2 of its TerminalOne platform;
  • Made key strategic hires, most recently adding tech visionary and industry vet Mike Peralta as CRO and president of global revenue;
  • Made strategic acquisitions including Adroit Interactive to combine, under one roof, the key components of successful banner advertising to drive improved campaign results to advertisers and agencies; and
  • Has been aggressively growing its domestic and international operations, opening offices in Los Angeles, Chicago, Boston, Washington, D.C., Ontario, Canada and London. Additional offices are slated to launch in 2011 in Latin America and Asia.

Safeguard’s $9 million follow-on funding demonstrates Safeguard’s ongoing efforts to ensure that our partner companies are well-capitalized to expand their market leadership. MediaMath not only created the first and only enterprise-class DSP in TerminalOne, but has also assembled one of the most seasoned digital media management teams in the industry.  MediaMath continues to achieve tremendous milestones while demand continues for the company’s enterprise-class digital media buying and reporting platform.

MediaMath is the clear leader in digital media buying.

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