The new agency, which will operate separately to Karmarama and have its own P&L, has launched with clients including BBC Radio 1 and the youth clothing chain Republic.
KID is funded by the Karmarama "K-Futures" scheme, which launched last year and allows staff to apply for funding if they have a business or innovation idea.
The agency will attempt to deliver insight into the 16- to 29-year-old market. It is establishing a network of journalists and young trendsetters, which will feed directly into its creative department.
Holt has worked at Karmarama for five years on clients including the BBC and Nintendo. He said: "We’re here to help brands be more useful to the lives of young people. We set out to help our clients understand their audiences in the most interesting ways and then develop ideas that young people really care about."