• Legacy T-Venture enters “definitive agreement” to combine with special purpose acquisition vehicle.
  • Trading name to remain “Innovid”.
  • Advertising technology player eyeing further M&A opportunities to fuel growth.

DT-backed Innovid agrees SPAC merger

DT-backed Innovid agrees SPAC merger

Source: Roman Kraft / Unsplash

Interactive-video-advertising and viewer analytics platform provider Innovid — a long-time Deutsche Telekom Capital Partners portfolio company — is to go public via a special purpose acquisition company (SPAC) buyout.

The SPAC takeover, by ION Acquisition Corp 2 — which listed on the New York Stock Exchange earlier this year — is expected to close between October and December 2021, subject to regulatory approval, with bankers Evercore and Morgan Stanley playing advisory roles.

According to Innovid, existing investors including Deutsche Telekom will retain their individual holdings in Innovid, which collectively equate to 64.4% of its equity.

The combined business said it intends to maintain use of the Innovid brand as its public persona and will trade on the New York Stock Exchange.

Capital raised from the transaction — $403m (£289m/€337m) — is a split of cash from the SPAC and a $105m private investment made up of contributions from “funds affiliated with ION”: Baron Capital Group; Fidelity Management & Research Company; and Phoenix Group, among others.

The merger gives Innovid an implied pro forma valuation of approximately $1.3bn (£934m/€1.09bn).

Deutsche Telekom originally bought into Innovid via the now-erstwhile venture capital unit T‑Venture in the mid-2010s through participation in two Series‑D funding rounds (Deutsche Telekomwatch, #41 and #49). The financing was predominantly geared towards supporting technology development, but both parties have been quiet on how this relationship has progressed over the years. At Deutsche Telekom Capital Partners, which now manages legacy T‑Venture investments (Deutsche Telekomwatch, passim), Innovid sits in the Secondary portfolio.

Pac-Man mode

Innovid said proceeds from the merger will be used to support organic and inorganic expansion “through opportunistic acquisitions”. The business has in recent years followed a similar tack, bulking-up its capabilities by subsuming Israeli-based advert-engagement and tracking software specialist Taykey, and Argentinean advert creation and management startup Herolens in 2017 and 2019 respectively.

Innovid is in growth-mode, posting annual revenue of $69m in the year to 31 December 2020/FY20 (+ 21%). It anticipates revenue growth of around 38% in FY21.

The business offers tools focused on streamlining advertising processes across multiple devices. Its flagship solution targets the connected‑TV (CTV) market, and is purportedly used by over 40% of “major global advertisers to manage ad campaigns”.

New York-headquartered Innovid was founded in 2007 by Chief Executive Zvika Netter, Chief Technology Officer Tal Chalozin, and International Managing Director Zack Zigdon