Between a pandemic, the emergence of new media business models and upcoming privacy changes in iOS, this might seem like a terrible time to get into digital advertising and marketing. Nevertheless, we spoke to top venture capitalists who said they still see investment opportunities.
When we surveyed adtech and martech VCs last summer, we focused on the impact of COVID-19. This time, we asked them to update us on whether deal flow has recovered (MathCapital’s Eric Franchi said the last two quarters have been some of the firm’s most active yet) and to look ahead at the possibility of additional regulation and the most promising new tools.
Regulation, they agreed, presents both a risk and an opportunity. For example, Christine Tsai of 500 Startups noted that as advertisers face more restrictions, “The easiest way for marketers to comply with these rules will likely be through software.” And of course, we asked about what they’re looking for in their next investment. You can read their full responses below.
Here’s who we surveyed:
- Eric Franchi, partner, MathCapital
- Scott Friend, partner, Bain Capital Ventues
- Christine Tsai, CEO and founding partner, 500 Startups
Digital advertising spend seems well on its way to recovering from the initial downturn during the pandemic. Are you seeing the same with adtech and martech deal flow?
Eric Franchi: Absolutely. Q3 and Q4 2020 were amongst the most active we’ve had in three years in terms of new investments and follow-ons. This seems to mirror the shape of many of our portfolio companies’ 2020 commercial results.
Scott Friend: There seems to be plenty of activity in adtech and martech, particularly across the commerce ecosystem with tools that support monetization for small merchants. Attentive (one of ours) continues to be a standout. I’m also seeing what appears to be a resurgence in digital OOH activity … maybe now’s its time?How much time are you spending looking at adtech and martech startups right now? Are you more focused on one or the other?