Online ad play Specific Media taps PE firm for $100M round

Francisco will take "significant minority interest," Specific Media chief executive Tim Vanderhook said. He added that two prior investors, Enterprise Partners Venture Capital of La Jolla, Calif., and Shepherd Ventures of San Diego, wanted to participate as well, but Francisco provided the entire round.

Piper Jaffray & Co. of Minneapolis, including managing director Ted Christianson and associate Todd Speece, advised Specific Media. Vanderhook said there was "no shortage of interest" from potential acquirers, but he stressed that the company's goal is to be the largest independent online advertising network of its kind.

Vanderhook would not disclose Specific Media's valuation in the funding but said it had risen sharply since Enterprise Partners and Shepherd invested $10 million in June 2006.

According to Vanderhook, Francisco's experience backing interactive marketing company Akqa Inc. of San Francisco factored into Specific Media's choice of investor. Francisco sold its stake in Akqa for an undisclosed amount reported to be near $250 million in February. Francisco invested $71 million as Akqa was created through a merger in 2001.

Specific Media is now "extremely profitable" and has achieved positive earnings for four years running, Vanderhook said.

Francisco's investment will go entirely toward acquisitions that will expand the company's geographic reach internationally and broaden its range of advertising formats, including online video and text-based advertising.

The online advertising sector has been volatile over the past year, with key players Google Inc. of Mountain View, Calif., AOL LLC of Dulles, Va., Microsoft Corp. of Redmond, Wash., and Yahoo! Inc. of Sunnyvale, Calif., acquiring smaller companies. The largest deal remains Microsoft's $6 billion purchase of aQuantive Inc. in July, Google's proposed $3.1 billion acquisition of DoubleClick Inc. of New York is still awaiting antitrust clearance.

Vanderhook said Specific Media will consider attempting an IPO in late 2008 or early 2009, but may accept another round of private capital instead.

"The chances are 50-50," he said. "It depends on our acquisitions and how the integration process goes."

Michael J. Flynn in the Newport Beach, Calif., office of Stradling Yocca Carlson & Rauth was Specific Media's legal adviser.