Inside Grapeshot’s $325 million decision to sell to Oracle
Oracle completed its acquisition of UK adtech startup
Grapeshot last week in a deal that sources said was worth $325
Grapeshot’s technology helps brands avoid unwittingly
showing ads next to embarrassing content, like airlines
advertising next to news stories about plane crashes.
The deal has turned Grapeshot’s executive team into
millionaires, and is another big Cambridge success, according
to its investors.
But they also said Grapeshot could have one day been
worth $1 billion, and that the company fought off investment
offers from private equity firms.
There’s a perception that promising European tech
companies might be selling out to US tech giants too early,
siphoning talent out of the region.
Startup investor Max Bautin popped open the champagne when one of
his investments, British adtech company Grapeshot, finalized its
$325 million (£242 million) sale to Oracle early last week.
Oracle announced the purchase in April, but did not disclose the
price. Sources said the $325 million tag included earn-outs,
where the executive team will be paid depending on how the
business does in future. The deal closed last Tuesday, the
According to Bautin, the acquisition turns Grapeshot’s executive
team into millionaires. “It’s always amazing when that happens,”
he said. Oracle and Grapeshot declined to comment for this
It isn’t just good news for the new millionaires. Bautin and his
fellow investors at IQ Capital and Albion Capital have seen
strong returns on their original investments into
Grapeshot. Back in 2014, the Cambridge startup was worth
around $15 million (£11 million), a person familiar with the
matter said. The $325 million price tag suggests its value has
rocketed 20x since then. The company raised less than $20 million
(£15 million) in total funding since launching in 2004.
Albion Capital led an initial funding round into Grapeshot in
2014, then participated in a follow-on round 2016. The company
has seen a 10x return on its investment, the company
“[John Snyder] built a hugely capital efficient business,” said
Robert Whitby-Smith, partner at Albion Capital. “The multiple on
the capital invested is enormous.”
Bautin said Grapeshot’s acquisition helped IQ Capital’s first
fund return 2x to its investors.
It’s the ideal outcome for a venture investor: find an efficient
startup with an outstanding executive team and amazing tech, and
enjoy an exit that will pay off big on your original bet.
Creating some wealth for a strong team who might go on to found
new startups is a nice side-effect.
Yet for all the champagne, all three investors sounded a little
wistful about the sale. All said Grapeshot had the potential to
become a “unicorn,” a term given to a startup that is worth $1
billion or more. The UK’s current crop of startups at that
valuation include Deliveroo and Farfetch, both of which are
rumoured to be nearing the point of listing.
Grapeshot could have been in ‘billion-dollar plus territory in
Grapeshot took a long time to land on its current idea. Its core
technology was created by Martin Porter, a highly regarded
Cambridge computer scientist who invented the Porter Stemmer
algorithm, commonly used in information retrieval systems like
“Martin Porter’s tech was always about contextual search,” said
Stuart Chapman, managing partner at Draper Esprit. “In some ways,
you could say it was phenomenal technology trying to find a
CEO John Snyder eventually landed on advertising, and brand
safety in particular. He noticed that the move toward
real-time bidding, where ads are sold through real-time auctions,
meant digital advertising was growing at a rapid clip but quality
was declining. Because everything was being done automatically,
there was no one to filter for nuance,
resulting in awkward ad placements like commercial airline
ads appearing next to news stories about plane crashes.
And so Snyder spotted an opportunity for Grapeshot’s contextual
advertising. As more brands redirected their ad spend to
programmatic, they also found their ads ending up in awkward
spots like terrorist sites. Eventually the concept of “brand
safety” became one of the most talked about topics in marketing,
and Grapeshot grew rapidly.
IQ led a £1.5 million round into the company in 2009, and by
the time Albion and Draper invested in 2014 and 2015, the company
was “going like a train”, according to Draper Esprit’s Stuart
Chapman. That only grew as more brands were turned on to brand
in the wake of media investigations that found ads for big
brands next to terrorist content.
When Albion invested in 2014, the company had revenues of £1.8
million. Filings show the company reported £9 million in revenue
for 2016 on a loss of £1 million. And sources told Business
Insider that revenue for 2017 was around £24 million, and that
the company was profitable.
“It had fantastic KPIs [key performance indicators], and it could
have been in billion-dollar plus territory in time,” said Max
Grapeshot fought off offers from private equity investors and
considered staying independent
Bautin and Whitby-Smith said Grapeshot had considerable interest
from multiple buyers and investors, including private equity
firms, but ultimately opted to sell to its longstanding partner
Oracle. The tech giant first kicked off serious talks in December
“In some ways, it would have been great to see it stay
independent, get unicorn status and IPO, which it had potential
to do,” said Bautin. “But then there was Oracle — their software
was good, the teamed like the new home, and there was impetus to
grow into a big player.”
The adtech market is generally undergoing lots of consolidation,
especially with Europe’s new privacy laws about to come into
effect. “Things are not quite so certain [in advertising],” added
Draper Esprit, as the last to invest and a proponent of long-term
investing, was perhaps the most reluctant to sell.
“We were not looking to sell out,” said Stuart Chapman. “The
approach was not what we were looking to do … That said, look
at the industry at the moment and the issues that Facebook and
Google have. Partnering with a major brand, the powerhouse of
Oracle, as a business person it doesn’t look like a bad
According to Whitby-Smith, there was unanimous agreement inside
Grapeshot to sell, partly because they had built up trust with
Oracle over time.
Superficially, the deal looks like another European startup
selling out too early to a major US corporation. But, Bautin
argued, it’s created several millionaires in the executive team.
They may go on to found further startups, and CEO John Snyder is
already a serial entrepreneur, having cofounded natural language
search company Muscat, which he sold to Dialog Corporation in
It’s also yet another success to come out of Cambridge, alongside
chip firm ARM and Autonomy.
“This is another Cambridge success story,” said Whitby-Smith.
“Both Martin [Porter] and John [Snyder] were at Cambridge
University. It’s another data point on the strength of Cambridge