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High-tech investment bank Progress Partners is spinning out a $10 million venture investing fund, called Progress Ventures, to be overseen by its two senior managing directors, Nick MacShane and Sam Thompson. The boutique bank’s fund, backed by bankers in the firm and external private investors, will focus mostly on seed investments in ad tech companies, MacShane said.
MacShane talked about the new fund with Mass High Tech after MHT broke the news of the fund’s first deal, last week – a $1.8 million round to back five-year-old Gather Inc. in a massive pivot toward branded content and demand forecasting. He said Gather’s new direction came from The Procter & Gamble Company’s (NYSE: PG) Pampers brand, which is the new Gather Inc. service’s first customer. Gather CEO Tom Gerace told MHT Wednesday the company plans successive years of 300-percent revenue growth in 2010 and 2011 with its new approach.
“We do want to make early-stage investments, but we also see situations – special circumstances like with Gather, which has raised a lot of money before, but is doing an internal round,” MacShane said. “We’re working with them to help them raise a next round of capital, and we have visibility into how receptive the market is to them. We anticipated an internal round at favorable pricing and then the ability to raise their next round as an up round.”
Progress Partners handles fundraising and M&A advisory for media and advertising technology startups. Its clients have included New York ad tech firm Tremor Media, which earlier this month announced its merger with Boston competitor ScanScout.
MacShane and other managing directors at Progress have been making angel investments on the side for several years, including several New York startups that have the word 'media' in their names – like MediaMath, Media6Degress and Tremor Media. Boston-area investments include EveryScape.
MacShane said New York is the “epicenter” of ad tech and media, echoing his own comments when Progress Partners opened an office there in 2008. “One of the things you have up in Boston is a lot of companies that are in ad tech, but after a while you start to wonder why they’re in Boston and not in New York,” MacShane said. Mature media startups like Gather are especially hard-pressed to find funding in Boston, where investors are either focused on life sciences and enterprise software, or they are not interested in Series B or Series C investments. Instead, Boston VCs are turning to early-stage deals here, or late-stage deals in China, he said. “Everybody wants a puppy,” MacShane quipped.
It’s the second VC fund to spin out of a Boston investment bank this month. At the beginning of November, Provident Healthcare Partners launched Provident Ventures to do deals in home care, healthcare IT and specialty pharma.
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