Amid uncertainty, ad tech mavens turn to startups

FirstParty Capital bills itself as an aid to the development of companies that want to build infrastructure, and further introduce automation to the ad tech and mar-tech sectors, as well as capitalize on the opportunities posed by emerging channels, such as CTV.

The outfit counts companies such as Bedrock, Good-Loop, Lumen Research and LightBox among its portfolio, with its early-stage investments focusing on bridging the gap between market conditions in Europe — where privacy laws such as GDPR have led to the accelerated decline of cookies, etc. — and North America.

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DoubleVerify’s PR agency did not return Digiday’s request for comment, but its latest move comes within 18-months of its $125 million purchase of AI-outfit Scibids, as observers in the space speculate that both it and ad verification-rival Integral Ad Science are pivoting to activation.

Ciarán O’Kane, a partner at FirstParty Capital, told Digiday the investment is a sign of “the LUMAscape collapsing on itself,” adding that in an era when most company’s pitch decks will rely heavily on AI and LLMs, it’s the data that trains them which will be key.

“The only moat is data, and proprietary data at that,” he said, further explaining his theory that the latter half of the 2020s will see the rise of “super signal aggregators,” i.e., whereby outfits with first-party data will be used to train algorithms tasked with delivering advertisers’ outcomes.

Incidentally, it’s worth noting that DoubleVerify was rumored to be interested in buying FirstParty Capital’s portfolio company Lumen Research a number of weeks back, albeit, sources close to such discussions were quick to scotch speculation when quizzed by Digiday.

Sources also pointed to how the latest development comes just weeks after The Trade Desk revealed its intention to purchase Sincera, a company that likewise aggregated signals gleaned from publisher pages to help better ascertain the quality of inventory on a page. Of course, Sincera was one of the early recipients of funding from The Trade Desk’s venture fund TD7 a little over a year ago.

Similarly, observers have pointed to others that have received funding from The Trade Desk’s startup fund, such as Chalice AI, a company exploring ways to speed up how to optimize LLMs to improve page-level analysis are also in growth mode.

For Matt Prohaska, CEO of Prohaska Consulting, the latest of investment and mergers and acquisitions — which was recently rounded out after Roku’s participation in a $25.5 million funding round of TVScientific — is atavistic of strategies first devised almost a decade ago.

“It’s an homage to Math Capital [the investment fund incubated within early ad tech trailblazer-turn-bankrupt firm MediaMath] that worked out a similar way to spread bets, including on some competitors, and still benefit from it,” he said.