Digital Ad Agency Has Commercial Potential

Ask any startup dot-com how it plans to stay afloat and the word “advertising” appears before you’ve even finished the question.

In fact, managing the online ad space is an art and a science, with the wisest businesses seeking help from an expert voice like SF Interactive.

“The real driving force here is the promise of revolutionizing the cost of doing business,” said company CEO/CFO Alejandro Levins. “As a result, we are re-engineering the way that businesses talk to vendors, customers, and even themselves.”

SF Interactive positions itself as a full-service digital marketing agency, developing Internet strategies for its clients. This may include partnerships with portals, development and distribution of e-mail newsletters, and various media buying. The company follows what it calls a “holistic approach” to marketing, with every point of customer contact becoming part of the media equation.
SF Interactive will also collaborate with “offline” agencies, but does not itself become involved in traditional media campaigns. Levins said that working offline represents a threat to the company’s valuation and actually dilutes its efforts.

“There are a lot of traditional media and advertising agencies working in print and TV,” explains Rob Healy, a principal at William E. Simon & Sons. “The digital arena is a different world from the offline companies. The people who are good in one are not necessarily good in the other. SF Interactive wants to be good at digital. Everything they do will become part of TV, as soon as TV becomes totally interactive.”

Healy’s company, which is headed by the former Treasury Secretary, led a $10 million venture round in December, SF Interactive’s first cash infusion. SF Interactive, which began in early 1997 with an investment of $7,500, claimed revenues of $2 million in 1998 and $7 million for 1999–during which time it decided to seek venture funding.

“We have always resisted the idea of acquisition by someone who has a different business model,” said Levins. “We want to continue what we are doing, and have control. It is difficult to find someone with a shared vision.”

Levins said the company has been inundated with investment opportunities for the past 18 months, but always turned them down after lengthy meetings. “At first I didn’t know what was right and proper and I didn’t want to offend anyone,” he recalls. “But I learned quickly. Now, I just say ‘send along a term sheet and we’ll talk later.'”

“The company is a very attractive investment,” said Healy. “Previously, it could not keep up with its own growth and couldn’t hire fast enough to serve the new business. Now, it is in a position to meet this great new demand for branding and marketing.”

In a Nutshell:

Company Name: SF Interactive
Address: 450 Sansome, 14th Floor San Francisco, Calif. 94111
Phone: (415) 249-6402
Fax: (415) 616-9751
Contact e-mail address: beth@sfinteractive.com
Web address: http://www.sfinteractive.com
Total Funding: $10 million
Investor: William E. Simon & Sons

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