W2 gets $30m in funding
Monitor Clipper investment will go toward acquisitions
W2 Group Inc., a three-year-old Waltham holding company that's been building a business in digital marketing, yesterday said it received a $30 million cash infusion from Monitor Clipper Partners of Cambridge with a total commitment of more than $100 million.
The initial funding round by the private equity affiliate of the Monitor Group consulting firm, will enable W2 to expand its operating units, the Racepoint Group public relations agency and the Digital Influence Group social media and marketing firm, through overseas acquisitions and investments in companies and technologies, said Larry Weber, W2's chief executive.
In exchange for what Weber called the "long-term investment relationship of over $100 million," Monitor Clipper will get an unspecified ownership stake. The company, founded by Weber in 2004, is on course to earn about $4 million this year on revenue of about $20 million. It employs 225 people, with 100 in the Boston area.
Weber, a veteran marketer, sold his first company, Weber Group, the nation's largest high-tech public relations firm at the time, to Interpublic Group for $16.5 million in 1996. While he bootstrapped his new company and has been funding its expansion through its cash flow, Weber said Monitor Clipper's investment would help accelerate growth and capitalize on a multibillion-dollar market opportunity.
Specifically, he said, both Racepoint and Digital Influence have been helping clients market themselves online by building digital "communities," bypassing traditional paid broadcast and print media. The alliance with Monitor Clipper will let W2 tap into online advertising, social networking, mobile, and digital outdoor technologies that will play an increasing role in future marketing, Weber said. "You're going to see more and more buildings that are billboards," he predicted.
Weber said W2 plans to disclose investments in as many as three companies by year-end, including a social networking software firm that could create new applications for Digital Influence. It also has been scouting for acquisitions in Tokyo and Shanghai that will give Racepoint entree to Asian markets. Racepoint currently operates primarily in the Boston area, San Francisco, and London.
"We're going to both look for acquisitions and look for investments, much the way a venture capital firm would," Weber said. "Boston is the perfect place to grow a company like this because we have interactive marketing, public relations, and web design talent."
Monitor Clipper typically invests between $20 million and $100 million in businesses that seek to benefit from "long-term tailwinds," especially professional services or advisory businesses, said Travis R. Metz, managing partner at Monitor Clipper Partners.
"We see an opportunity to build a firm that takes advantage of the trends going on in next-generation media," Metz said. Noting Weber has represented Monitor Group, the consulting firm, he said, "We've known Larry for over five years, and he's done this before."
Weber said W2, which represents clients ranging from Genzyme Corp. to eHarmony.com to the One Laptop Per Child organization, would like to start a branding firm from scratch and to extend its marketing reach into growing healthcare niches such as physicians communications and continuing medical education.
W2 also hopes to grow 20 percent annually, said Weber. He said the holding company's goal was to ring up annual revenue of $300 million within five years, including the sales of agencies it acquires, and eventually go public or be sold to a technology company. "There's a wealth of monetizing opportunities," he said.
Robert Weisman can be reached at weisman@globe.com. 