PR agencies eye equity with client-focused venture arms
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More public relations firms are creating venture arms or outside funds to support the clients they are advising.
Why it matters: The trend could signal a new business model for an industry that is grappling with economic headwinds brought on by AI and its threat to billable hours.
Driving the news: Capital V, a new boutique PR firm founded by Jessica Schaefer, is the latest to launch a venture arm.
Catch up quick: Schaefer previously founded PR agency Bevel, which was acquired by The Avenue Z Network in 2023.
- (Prior press reports indicated Bevel was sold for $75 million, which Capital V's spokesperson initially confirmed to Axios. Avenue Z subsequently told Axios it valued the deal at $9.1 million. Schaefer told Axios she's bound by a confidentiality agreement that prevents her from discussing the specifics of the deal's financials.)
- Before Bevel, Schaefer led communications for hedge fund titan Steve Cohen's family office and his firm, Point72 Ventures.
Zoom in: Capital V will invest $50,000 to $150,000 in its startup clients or it will take equity in exchange for strategic communications services, according to the firm.
- Schaefer says Capital V is backed by two foreign family offices: one located in Monaco and the other in Dubai.
- "We're currently raising a mix of equity and debt from a number of individuals and family offices. We aren't disclosing their names at the moment," a Capital V spokesperson said.
Zoom out: Venture arms or structured investment vehicles allow these PR firms to take equity in startups, often in exchange for services or alongside cash investments.
- MikeWorldWide launched its venture arm, MWW Ventures, in 2012, while Lulu Cheng Meservey, founder of Rostra, recently raised $40 million for a fund, and VSC raised $21 million for its fund VSC Ventures in 2022.
What they're saying: "We don't take on every client," Schaefer says. "We heavily vet them, and we approach it more as a VC firm would. We analyze, like, is this a company I would want to make an investment in?"
- Schaefer says the firm will also charge a "success fee" if the company secures more funding based on its brand-building work.
- "Let's say they're able to secure an additional amount of capital, or they're bought for X valuation, and we've contributed to that increase, then we'll take a fee for that," she adds.
Editor's note: This story has been updated with additional comments from both Avenue Z and Schaefer about the value of the Bevel acquisition.
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