The fund will make bets on emerging media technologies for Generation Z, including those related to the metaverse.
Sir Martin Sorrell, the founder of advertising agency WPP and marketing services group S4 Capital, has raised a $100m fund for S4S Ventures, the investment vehicle set up at the start of the year. The fund will make bets on emerging media technologies for Generation Z, including those related to the metaverse.
“The fund we’re targeting is about $150m and we’ll have the first close very, very soon. The first [close] will be around about a $100m,” Sorrell told GCV. The management team, including Sorrell, is putting some of the capital with most of it coming from outside investors. The fund will be managed by Sanja Partalo.
GCV spoke to Sorrell ahead of the announcement to hear more about how the fund will work.
“We’ll be a general partner and we’ll have a share of the carry, which we will distribute to those people inside our company to come up with ideas that we deploy. The idea is to work on early-stage companies – not outright startups or non-revenue generating operations, but maybe series B or series C companies,” said Sorrell.
“We definitely will not acquire anything, but what we will do is work with the technology if we think it’s in the interest of our clients to do so,” Sorrell said.
The areas of interest for the fund include virtual reality technology developers. “Metaverse is another thing we’re very close to. With Facebook’s Meta development, metaverse with Nvidia, with Roblox and with others and we’ve utilised the technology.”
S4 has, for example, built a studio in New Delhi that can create commercial video and advertising content around the Epic Games’ Unreal Engine, on which games like Fortnite run.
S4’s clients are some of the world’s largest media and technology groups, including Google, Meta, Amazon, PayPal, Hewlett-Packard, Netflix, Procter & Gamble, Mondelēz and BMW.
“There are three areas [S4 is in] – the first being content around social and around search and around video-connected TV,” Sorrell said. “The second is around data and analytics and digital media, so dealing with the big platforms [such as] Google, Facebook, Amazon, Tencent, Alibaba, Apple and Microsoft.”
He continued: “We recently branched out into a third discipline around technology services to compete with Accenture more effectively because we compete very heavily with them.”
S4 Capital posted a loss before tax of £55.7m for 2021 after a spate of acquisitions, but Sorrell is undaunted by the recent stock market downturn and the fall in valuations of startup.
“What we’ve seen in the listed markets has not permeated the PE or VC markets yet. Our view is it will do over the next two or three quarters, maybe by quarter two, quarter three of this year.
“I am in a fund, which invested quite heavily in PE last year. And that fund was up 45%. I haven’t seen the mark to market this year, but I assume it will be down 15% or 20%. So the net will be between 25% and 30% over the 18 months or so.”