MDC Partners' kbs+p To Operationalize New Investment Arm Within Agency Says Venture Unit's Founder Herman

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kbs+p venturesKirshenbaum Bond Senecal & Partners of agency holding company MDC Partners announced the launch today of its new investment initiative known as kbs+p ventures which will "seek to invest in early- and mid-stage companies that focus on advertising and mobile technologies and design," according to The New York Times' Tanzina Vega. Read more.

kbs+p's chief digital media officer, and the new venture unit's founder and managing director, Darren Herman, discussed the goals and next steps of the newly-founded unit.

How are kbs+p's efforts different than what holding companies such as Publicis and WPP Group have done on the investment front?

Unlike many of our peers, we've operationalized our investment arm at the agency level. This means we're much closer to innovation and what's happening within the agency so that our investments flow strategically to where we are thinking within our walls here. What I've seen historically are holding-company-wide investments that don't really affect any of the agencies - they are just big checks with a holding company behind them. We wanted to make sure that we were able to add value beyond the check and make sure it was aligned with our vision at kbs+p.

Should we take from this initiative that an investment portfolio is the path to survival for today's agencies?

I think survival is a strong word. Many agencies can survive. However, kbs+p doesn't just want to survive, it was to evolve and accelerate. I think we're smart enough to admit that we don't know exactly where the next big agency model is going to come from, but we do recognize that it's going to come from business transforming ideas. So, with that said, we want to create and invest in a portfolio of business transforming ideas that are strategic to us and our pillars.

Will kbs+p ventures take board seats in its investments? And, what's your role in this - will you have a staff that will help run kbs+p ventures?

Taking active and observer board seats are not out of the question at all. We know we probably won't lead too many investments this year nor actively participate on many boards, but we will play at least an observer role and be "active" without it having to be papered in the deal docs. Why? We're new. There are many other venture firms and super angels that we highly respect and plan to invest with and they are the ones who are going to participate on the board. As kbs+p Ventures gets it's feet wet and as we staff up, we'll look to taking more active and leadership roles with investments. I think the "crawl" before you "walk" run analogy holds up here and many entrepreneurs and co-investors will respect that.

As President and Managing Director of kbs+p Ventures, I will more often than not be the person who gets involved.

How will kbs+p's clients play a part in the portfolio of invested companies? What's their role?

At this point, we haven't "productized" anything yet so we'll see where this all goes. We do know that a few of our clients have expressed interest in working with some of our portfolio companies and we love that - if we can make introductions and cross pollinate, the whole ecosystem wins. What most startups need is brand validation - and that's something we can bring from our side.

We also expect to have our portfolio company founders/CEO's participate in a yearly get together with our senior clients to mix, mingle, and hopefully pollinate. The more exposure we can give between our clients, startups, and our staff creates a win/win/win for kbs+p agency.

Can an agency keep up with the 24/7 nature of a start-up? How will kbs+p match the needs of the startup?

There's a fallacy in the industry that agencies work 9-5pm. I think anyone along Madison Avenue would disagree with that. Kbs+p and it's staffers work just as much as a typical early stage startup and that's because we treat ourselves much like a startup and employ many of the same principles. One of the things we're doing to reward our agency staffers is to share a portion of the proceeds of any liquidity of our portfolio companies. We think this is very important as it adds incremental compensation to everyone and it aligns all of our thinking in order to help move a business forward -so when a startup like Yieldbot needs help working on their promotional collateral and our creative directors help them, they [creative directors] are aligned with the output of the material.

By John Ebbert

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