Dive Brief:
- Ad tech ventures have experienced a flood of venture funding in recent years, but some industry experts say that river of funds is running dry.
- As Joe Medved, partner at SoftBank Capital, told the Wall Street Journal, “The investment community moves in waves, and ad tech is certainly not at a peak right now.”
- Firms that have found ways to expand business without the need to increase head count have seen the most success. Those with a SAAS model that expand their customer base automatically without using sales people have seen more success with funding as well.
Dive Insight:
The river may be slowing, but it hasn't dried up yet. Just this month Venture Beat released a report on VC funding that showed marketing tech firms had received $6.8 billion over the last two months alone. Of course, a great deal of this was from acquisitions, but the market is still fluid.
According to analysts, the ad tech businesses that have launched in the past five years have not shown the rapid growth that early-stage investors look for. "Ad tech has become synonymous with relatively low margin, campaign-driven models, which yields poor exit multiples," Medved explained to the WSJ.
