Pinstorm Looks To Raise Money To Fund Global Acquisitions;

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Pinstorm Looks To Raise Money To Fund Global Acquisitions;

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While advertising bigwigs like Euro RSCG and Publicis are scouting for digital acquisitions in India, search marketing company Pinstorm intends to raise money to fund international acquisitions. These acquisitions, says Pinstorm founder and CEO Mahesh Murthy in an email interview with ContentSutra, will allow the company to expand its offerings in North America, Western Europe, Australia, Japan, Korea. India, however, remains key for Pinstorm, which had revenues of $3 million in 2006-07:

Q. What is the purpose of the acquisitons that you’re considering?
Pinstorm plans to be among the leading digital marketing companies in the world. In less than 4 years, we have grown to 6 offices in 5 countries organically - in fact, we’re probably the only Indian Advertising MNC today, with offices in the US, China, Singapore, Malaysia and India.

We also believe that the traditional advertising agency model based on commissions and retainers is on its last legs. We’re structured very differently – in a way far more apt to the century ahead than to the century gone by. We understand many traditional advertising multinationals are also on the look-out for buyouts in India – my sense is that we will be able to give entrepreneurs a better exit and a better future than most other traditional options they’re being presented with.

Organic growth may not be fast enough to keep pace with our dreams - so we’re looking at partnering with and/or acquiring businesses around the world who have the same beliefs and outlook to the future that we do.

Q. What kind of companies are you looking to acquire - within the search marketing domain or are you looking at other domains as well?
We’re a pay-for-performance marketing company – and typically most of our buying is in the digital domain, because that is where the response is most trackable. We already offer pay-for-performance services in SEM, SEO, Email Marketing, Online Community Management, SMS marketing and more. Over time we believe some parts of the television, print and radio ad spends will also move to a more measurable pay-for-performance model, and we want to be among the first in the world to offer our clients more accountable marketing solutions.

So we’re looking at companies whose clients are enthused by our model – and who can add either geographical reach, vertical depth, or delivery strength to our team.

More in the extended text

Q. Which markets are you looking to enter by means of acquisitions? How many companies are you looking to acquire?
There are obvious markets – North America, Western Europe, Australia that stand out for us – in addition there are not-so-obvious markets like India, Japan, Korea etc that also make sense, given our current client reach. We currently think we could look at 3 – 6 companies, but this could change over time.

Q. How do you intend to finance the acqusitions and what’s the size of your warchest?
We’re still internally funded – and we’re looking at external funding for the first time. We’re putting together a significant war chest – more than enough for our plans :)

Q. You’d mentioned in an interview with ContentSutra that Pinstorm had planned to raise VC funding by the end of 2006…
Not yet. We put that off by a year - and we think we’ll look at it about now.

Q. You’d also said that that you expect Pinstorm to close 2006-2007 with revenues of around $5 million. Did you meet that target? What kind of revenues did Pinstorm end the fiscal with?
We didn’t raise money last year, or acquire businesses - our sense was that it was too early - so we grew less aggressively than we originally thought we would. We however still organically tripled our revenues to about $3 million. We should organically double that again this year.

Q. Could you delve on the revenue split between various markets - India and International?
In the year gone by, we were about 59% overseas business, 41% Indian business.

Q. Is there any particular market which you see as key for Pinstorm, and do you see much opportunity in India?
India is core for our plans – we are already the leading firm in the field here and it is from India that we produce strategy, creative and media buys on behalf of our clients around the world. So it’s strategic to continue to lead in India. Further, digital marketing has come of age in India – if spends last year were around Rs. 350 cr here, this year, we estimate them to be about Rs. 550 crores – of which search alone should have grown from Rs. 235 cr to about Rs. 375 cr. And if you were to believe the Zenith Optimedia numbers (which I don’t) it should triple again in another year.

We look to have dominance in every market we enter. We’re already no.1 in India, No. 1 in Malaysia, no.3 in Singapore – and we’ve just opened in Beijing and Silicon Valley – and we’ll work to increase our share of each of those markets.

By Nikhil Pahwa Oct 9, 2007 12:10 AM ET

Posted In: Advertising, Money, M&A & Venture Capital, Venture Capital, Search, Technologies / Formats