That’s Rich: FM Publishing Gets Big Valuation
Federated Media Publishing has raised between $40 million in $50 million in Series C funding at a $200 million pre-money valuation, peHUB has learned. Oak Investment Partners led the round, with return backers like Omidyar Network also participating. An official announcement is expected to come early this week [Update: Here it is: FM_Release.pdf]
FM Publishing is a Sausalito, Calif.-based operator of an advertising network for more than 100 online publishers, including Boing Boing, GigaOm and TechCrunch. It’s run by former Industry Standard honcho John Battelle, and is known to take extremely large commissions (by traditional ad sales standards, not by more generous online ad network standards).
I’m told that FM had just under $25 million in 2007 revenue, and expects to generate upwards of $60 million this year. That’s one hell of a jump in a down economy, but I’ll accept the conventional wisdom that online advertising will continue to grow, particularly because it represents an affordable alternative for cash-strapped offline advertisers.
But, still: A $200 million pre-money valuation? It really must be the silly season, or perhaps Oak just has so much money that it doesn’t feel compelled to wrestle down terms. Again, that’s Oak Investment Partners — a report from two weeks ago had identified the lead as Oaktree Capital Partners (which would have been really weird).
I have requested comment from Battelle and individuals at Oak and investment bank Savvian, but have not yet heard back from any of them. If they do respond, I’ll update this post.
Update: Battelle declined comment via email, except to write that some of my info is incorrect. My guess is he’s taking issue w/ the revenue numbers, which came from a source who I know has seen FM’s financials. The overall funding information came from that source, but was confirmed by someone much closer to the VC funding round.
Not saying I’m right and Battelle’s wrong, particularly since I don’t know specifically what John’s taking issue with. Just trying to provide you, dear reader, with some context.
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Tom Foremski said on April 14, 2008
FM was boasting it would do $50m in 2007 (at the beginning of 2007). Ad networks such as FM do not have a defensible business. Quite simply, if their online publishers get large enough they can afford to run their own ad sales teams. Maybe FM is going to use the money to make acquisitions in the content space. That way it can’t be dumped and it can take a large share of the ad revenues. That’s what I would do.
Joe said on April 14, 2008
This is exactly the kind of investment that they should be doing, early stage investment always requires a bit of silliness, ask anyone that really done participated. Observing the process is difficult for some of the “he says, she says” type of reporting that dominates the investment sector. Fast paced, high risk and a lot of unknowns, if you don’t do it it the difference between watching an Indy 500 and actually driving in one, although in my case it is more like the dirt track stock car circuit:^)
Eric Eldon said on April 14, 2008
Dan, my source told me Oak Hill Capital Partners, not Oak Tree Capital Partners.
[Insert obligatory pun about it being hard to pick the tree out of the forest, here.]