Term Sheet

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Why did AOL buy Adap.tv now?

August 7, 2013: 12:59 PM ET

tim_armstrongSome thoughts about AOL's $405 million push into the online video ad space.

FORTUNE -- AOL Inc. (AOL) today announced that it will pay $405 million to acquire Adap.tv, a San Mateo, Calif.-based online video advertising platform. It's the largest acquisition of the Tim Armstrong era, and represents a sizable return for many of the venture capitalists who plugged just under $50 million into the business between 2007 and 2011.

Some notes and thoughts about the deal:

Why now? AOL pulled the trigger on the exact same night that Adapt.tv rival YuMe (YUME) priced its IPO, and less than 48 hours before Tremor Media (TRMR) reported Q2 earnings. And given that YuMe's IPO priced well below expectations and that Tremor's revenue growth has been sluggish, might Time Armstrong not have saved himself a few million dollars by waiting a few more days? Unless, perhaps, there was a stalking horse...

Israeli VC renaissance. Adapt.tv is not an Israeli company, but its first investment came from Herzliya-based Gemini Israel Funds, and is just the latest in a recent spate of big exits for Israeli VC firms -- the largest of which was Google (GOOG) buying Waze for $1.1 billion. Got to think this could be a catalyst for renewed VC fundraising in the country, after nearly a decade-long drought.

Heritage deal. The Gemini partner who led the firm's Adapt.tv investment, Danny Cohen, is now with a different firm (Carmel Ventures). And the Spark Capital partner who led that firm's initial investment in 2010, Dennis Miller, also has moved on (president of ops at TVGN).

Return on investment: The final VC money into Adapt came in early 2011, via a $20 million Series C round led by Bessemer Venture Partners. Pitchbook Data reports that the round had a post-money valuation of around $162 million, while the Series B round (done in two parts) finished up at around $58 million. So good returns all around, but not so amazing at the later stages [Note: a source also suggests to me that the Series C came in above $200 million -- something I reported in this morning's Term Sheet -- but I've since spoken to multiple folks who suggest Pitchbook's figure is much closer to the truth].

Sign up for our daily email newsletter on deals and deal-makers: GetTermSheet.com

Join the Conversation
About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

Email a Tip | @danprimack | RSS
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.