Commentary

MDC Ventures Forth Where Many Companies Have Gone Before

MDC Partners announced a few days ago that it is creating MDC Ventures, a vehicle for investing in early-stage digital media and marketing technology companies.

It’s all about the learning and giving clients a competitive edge, according to the company press release announcing the new set-up, which is based on a similar model that one of its agencies, KBS, has had in place for a while now.

“The MDC Ventures operating model differentiates us as partners and strategic investors, providing our portfolio companies with exclusive access to some of the brightest thought leaders in the industry,” gushed Jessica Peltz-Zatulove, who the will run the day-to-day operations of MDC Ventures.

She makes it sound almost altruistic of the holding company to be doing this.

But I’ll bet investors in MDC Partners would be happier if it just made a few bucks profit every year—something it hasn’t done in a while. I only checked the last four years, but MDC Partners’ net losses during that time ranged from $47.9 million to $142 million.

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That’s a lot of red ink.

Maybe getting rid of Miles Nadal, a bit of a greedy pig-dog and the former CEO will help. In a number of documents, the company has said as much. That it will help, that is.

The announcement didn’t do a whole lot for the company’s stock price last week. It started Monday at $8.75 a share and ended Friday at $8.35.

Holding companies have been investing in tech start-ups for quite a while. Take Interpublic Group, for example. It invested $2.5 million in Facebook back in 2006, when Myspace was the big kahuna in the social-network arena. Six years later, when it sold the last of its holdings in FB, which had become the 800 pound gorilla in the social space, IPG was $200 million-plus richer.

Maybe if MDC picks a couple of winners like that, its stock will hit the $10 per share mark some time in the next couple of years.

 

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