Roll-Up King Jonathan Ledecky is Back

A 90’s investment manager who made a killing buying small independent companies in the same business line and stuffing them into a public company is back. Harvard alumni Jonathan Ledecky has just sealed a deal creating the first SPAC in the mobile advertising space. I interviewed the SPAC CEO for Growth Capitalist today who says Ledecky is going all in with a big bet on this space. This means they expect to start gobbling up more digital ad companies–especially ones who’ve figured out how to make revenue off those annoying video ads media companies like Forbes force you to watch before you get to their stories.

Last year Ledecky started buying video gaming companies but quickly branched out from trying to score off a Zynga like play. Then he found this ad executive Robert Regular and wooed him into allowing his private advertising exchange company, Kitara Media, to be part of the SPAC. Regular got a nice salary contract and ten million in the SPAC’s stock in return for agreeing to be Ledecky’s CEO. This is good news for budding start-up guys in mobile advertising because it means there are deep pockets out their looking to buy your company if you fit with the SPAC’s strategy. You’ll need $5-15 million in revenue and the SPAC* CEO Robert Regular (it’s called Ascend Acquisition Corp $ASCQ) might be interested in doing due dilly on your budding business.

This isn’t Robert Regular’s first rodeo either. He’s was part of a team that made sick big money on the sell of Right Media to Yahoo for $800 million six years ago. He then built Kitara Media from a boot strapped budget over five years, saying no-no to Vulture Capital money, and some how has it earning real money…like $20 million in yearly revenue. They haven’t filled SEC documents detailing how he built Kitara yet (audited Balance Sheet and Income Statement is coming) and wouldn’t tell me if there is actually a net profit. But in our Growth Capitalist interview he extolled he thinks the market will see it as real company, making real money , with a solid chance to make a ton more (I’m paraphrasing).

Check out www.growthcapitalist.com for more insight into the deal and additional VC interest in the space.

*SPAC = Special Purpose Acquisition Company. Hedgies go out and get investors to trust them blindly and give them millions. They use this shell company to buy other companies but it’s not totally clear what they might buy when you first invest (RISKY). Then without the pain in the butt work of a roadshow for a traditional IPO (or expensive investment banking fees) they just do a reverse merger with a private company and boom it’s public because the SPAC already went out did the leg work to get that neat little ticker symbol ($ASCQ) so it could trade on the public markets. This stock is usually really cheap at first and the gamble is the guys running the SPAC will actually buy stuff that the market thinks can make real dollars…not just have manipulated cash flow statements and revenue numbers that they don’t always collect the cash on. If you’re selling your company into the SPAC and you have to lock up all the stock they gave you but then you get sold out of the SPAC or shut down then you could get screwed and not earn a lot (RISKY). But if you get to stay in and one of the companies in the SPAC earns a NET PROFIT and people buy the stock. Holly Cow your little start up just made you a millionaire. Only three SPAC deals have been done this year according to this research. So it’s going to be interesting to see if hedgies are going to start make an investing comeback with them.

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Comments

  1. Jonathan Ledecky could be onto something here. I notice that many Youtube videos now have an advertisement before the presentation. Similar advertising is being presented on other sites also.

    On the other hand, wasn’t the “pump and dump” on the Facebook IPO based on projected advertising revenues? Those advertising revenues turned out not to be realistic.

    Hmm… risky indeed.

    I wonder if Yahoo made money from their purchase of Right Media, or were they just eliminating the competition?

    Maybe Ledecky can get Google to buy his new SPAC?

    :-)

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