Bootstrapped adtech company ADTZ invests in three startups to improve its marketing portfolio

There are various ways to grow, and one is to invest or acquire small stakes in complementary startups. Madrid-based adtech company ADTZ is following that model with investments in RocketROI, Adman Media and Adgage.

adtz investments

Following the acquisitions of social media marketing startups SocialMoov and Makemereach, ADTZ’s co-founder Juan Domínguez explained in this very same medium that they were working “very hard” to strengthen their market position and enhance their portfolio. At the time, few imagined that this meant investing in small marketing startups that have built complementary products to ADTZ’s.

The Madrid-based adtech company is now unveiling investments in three startups –RocketROI, Adgage and Adman Media– that will help it reach new clients and offer a fully integrated online marketing solution.

Led by Ignacio Rodes and launched in 2014, RocketROI’s software helps advertisers optimize SEM campaigns. Both ADTZ and RocketROI had been working together for quite a while, and this relationship will continue to expand as a result of ADTZ investing €500,000 (which includes a loan from ENISA) into the Barcelona-based startup.

Adgage, which specializes in mobile advertisement, was also born around the same time as RocketROI and is now partly owned by ADTZ, following the acquisition of a 51% stake in the company.

The trifecta is completed by ADTZ buying a “relevant stake” in the Latam subsidiary of content marketing agency Adman Media.

“The idea behind this strategy is to sell fully integrated marketing solutions”, Juan Domínguez tells us. “We’re not going to focus exclusively on agencies -although they will continue to be very important for us- because there’s a significant and growing number of Internet companies in need of services like ours, which allows them manage three different marketing channels (social, video, mobile) from one single platform”.

Covering all online marketing areas means that competing with powerhouses like Kenshoo and Marin Software, which acquired SocialMoov and Makemereach, respectively, is now a possibility. “Our main goal at the moment is to be more international than ever and to compete head to heath in the industry”, Juan says.

ADTZ, which was born in 2008, employs more than 70 people and has yet to raise money from institutional investors, had revenues of €21.5 million in 2014 (+54% YoY) and expects to reach €37 million this year. “This is our estimate for 2015, not taking into account the investments that we’ve just made and other deals that might happen in the near future”, Juan explains.

It’s not very common to see Spanish technology companies invest in smaller startups in order to grow, usually opting instead to build products internally. Ticketea, which acquired Telentrada, Telemaco and the remaining assets of Berlin-based TodayTickets, comes to mind as another example of this strategy.

“To cover the complex needs of clients you have to have knowledge in multiple areas”, Juan says. “You can achieve this by either buying companies -and you need cash and very strong teams to do that- or by following our model, which is to approach smaller companies with humility and by avoiding the temptation or feeling of thinking that you can copy them in six months and asking them to join us for the ride”.

What’s ADTZ pitch to get them to join?

“A bit of cash for product development and hiring, the possibility of launching in new markets where we already have a presence and a big suitcase full of lessons learned over time and by making mistakes. If we get together with smart people and with our same passion, we think we can go further than if we try to do it by ourselves”, Juan concludes.

The social ads space is heating up, and ADTZ is in the midst of it

Guest post written by Juan Domínguez, co-founder of adtech company ADTZ. Juan shares his thoughts on the recent acquisitions of SocialMoov and Makemereach and how ADTZ is positioning itself in the competitive social advertising market

adtz adtech

This is a guest post written by Juan Domínguez, co-founder of adtech company ADTZ. Juan shares his thoughts on the recent acquisitions of SocialMoov and Makemereach and how ADTZ is positioning itself in the competitive social advertising market. We previously covered ADTZ in this article about boostrapped startups in Spain.

Last week we saw a flurry of M&A activity in the social ads space. Unfortunately for us, this activity has been restricted to the French market, where two social advertising companies, SocialMoov and Makemereach, were acquired by Marin Software (US) and Perion (Israel) for $20.8 and $13 million, respectively.

This is of great significance for those of us in the social adtech arena for two main reasons:

  • Marketing technology suppliers and media conglomerates have become aware of the importance of social and how different it is from other channels.
  • These very same suppliers have been looking to acquire technology and market share far from their natural markets.

I co-founded ADTZ -which is a direct competitor of both SocialMoov and Makemereach- in 2008, and we have been biding our time, knowing that knowledge in cookieless ad tech cannot be developed overnight.

We even spoke to an executive of Marin Software a year ago, who admitted that their social product was not good enough and that they would have to start from scratch. In the end, apparently, they decided that buying a French company was good enough.

At ADTZ we truly believe we are going to see many changes and acquisitions in the near future. Facebook has upped the game with its roll out of the Atlas adserver and with the coming integration with WhatsApp data, two things that will truly transform the company into a viable competitor to Google. On the other hand, Twitter has taught the world that despite not growing its user base as fast as desired, its power to influence is enough to attract a lot of money.

In this world there is a very limited number of companies, approximately 20 worldwide, that have API links to both Facebook and Twitter (ADTZ is a proud member of that club). Many publishers, adtech companies and media agencies will be forced to integrate knowledge and systems into their operations.

We are working very hard to strengthen our leading position in our markets and enhancing our portfolio with SEM management tools, TV audience engines to improve targeting of branding campaigns or tailor-made measurement systems for large customers. We are even considering the possibility of raising Venture Capital money and do a number of acquisitions that would speed up our market position and improve our numbers.

So, from where we stand, there are a few years ahead of excitement and opportunities, and we expect to get plenty of both.

Bootstrapping in Spain: when raising capital is not the only way to grow

At times, startups can choose to grow on their own or raise capital from investors. In this article we talk to some of the main boostrapped startups in Spain to know more about their journey.

bootstrapped startups spain

At a time when the level of investments in Spanish startups is higher than ever and there’s more capital than projects to back, it’s worth noting that raising funds from VCs or business angels is not the only way to go.

Over the years Spain has seen the creation and growth of various tech companies that haven’t had to reach out to investors from the very beginning, trusting their instincts, product and sales operations to build a business before -if ever- VCs join the party.

Building companies in Spain with your own cash

When online travel agency was born in 2001, the Spanish startup scene was far from its current size and still recovering from the burst of the dotcom bubble. However, this didn’t stop Egypt-born Amuda Goueli and his co-founder from launching the site with the aim of becoming a truly global online travel agency based in Madrid.

Something that they did without the help of investors and by reinvesting most of the company’s revenue in its own growth and development. “I’ve always defended the idea that when you start a business, you can’t be only thinking about getting rich”, Amuda tells Novobrief in an interview. “If you do that, when you face adversity -and you certainly will- you’ll just give up and start something else”. The 100+ person company has never disclosed its revenues, but we understand they are above €10 million and growing since the financial crisis of 2008.

Leaving personal criteria aside, it’s certainly true that not raising money from investors -especially at the very beginning- gives startups and companies freedom that they wouldn’t have otherwise. Despite what some startups and entrepreneurs still think, investors are in the game to make money and provide a return to their LPs. And, at times, this affects the way companies operate and their priorities.

“I think VCs and investors play a very important role in the ecosystem”, ADTZ’s co-founder Juan Domínguez says. “However, I’d suggest to any entrepreneur to wait as much as possible to bring investors on board for three main reasons: raising money takes a lot of time, the objectives of VCs and entrepreneurs are usually not aligned and, third, companies should aim to become cash-flow positive to survive, instead of relying on investors to pay the bills”.

Juan says this from his own experience of building both VC-backed and bootstrapped companies. He was one of the original founders of and managed to sell it to Grupo Orizonia for an undisclosed sum, without having to raise external funding. Few years later he launched private travel sales site Club Santa Mónica, which did not succeed and left “a bad experience in terms of working with VCs”.

This might help explain why he decided that ADTZ would grow organically, with no help from VCs at the early stage. The social advertising company, which was born in 2008, currently employs more than 70 people and had sales of €23 million in 2014, up from €15 million in the previous year.

Controlling your own destiny

(The video above is a classic talk by David Heinemeier Hansson, co-founder of Basecamp (37Signals), about boostrapped companies) 

All bootstrapped startups Novobrief talked to pointed to the fact that this form of growth allows them to control their own destiny, by not giving up a stake of the company to investors and thus controlling all aspects associated to the business. “If you raise money too early you might do so with a very low valuation”, Juan Domínguez says. “And in most of those cases founders end up giving up too much of their startups”.

Wences García is the co-founder of MarketGoo, an online marketing software company focused on helping users and brands improve its SEO. The company was born as a spin-off of advertising agency Vexlan and it now operates independently; although the company declined to disclose sales figures, we understand that it’s doing fairly well both in terms of users and revenue.

“To be able to operate as a bootstrapped company you need to have a business model that generates cash flows quickly. If you’re able to achieve this, it will make your company much more efficient”, Wences says. “It’s also important to understand that bootstrapped startups tend to grow slower than VC-baked ones. However, it’s also true that you have a bigger margin of error and you can usually try more things”.

“To us it’s fundamental to have this sense of freedom and to be able to combine two key aspects: work and our own lives”, he explains. “That said, we’re not dogmatic about it and if at some point we need to raise money, we’ll certainly give it a try”.

When raising capital is useful, and most importantly, needed

bootstrapped spanish startups

The fact that startups can be bootstrapped at the early stage doesn’t mean that Venture Capital might not end up being useful later on, as companies mature and need capital to grow in certain areas.

Sergio Álvarez, co-founder of CartoDB, experienced this first hand. Formerly known as Vizzuality and founded in 2009, the company was bootstrapped up until last year, when CartoDB raised $8 million from Earlybird VC, Kibo Ventures and Vitamina K.

More than five years growing with their own money and with some small help European public institutions that didn’t stop CartoDB from scaling. At the time of the investment, CartoDB had annual revenues of €1.5 million, 16 employees and had already opened an office in New York City.

Why raise money, then? “Speed, being able to widen our vision and focus”, Sergio tells us. “This capital also allows us to be more risky and focus 100% on product; before we always had to complement the product side of things with consultancy work that was a significant part of our income.”

ADTZ’s Juan Domínguez is on the same page, and he admits that the company is currently raising its first round of funding after years of growing bootstrapped. “I still believe that if you can grow on your own, you should totally do it”, he says. “However, I also believe that, at the right time, VCs can become essential. In our case to buy other companies and grow in two main areas: product (mobile, video) and geographically (Latin America)”.

A process -raising capital- that takes time and can move entrepreneurs away from what should be their main focus. At a time when it seems that raising capital has become a true milestone in the life of a startup, Amuda concedes that “entrepreneurs’ major obsession should be their idea, their product and their business. Funding is a tool, but the company should be the goal, the end point. That’s what’key.”

Photo | jarmoluk