Michael Hayman, who left his job as chief executive of The Communications Group in September 2009, has linked up with Nick Giles, who resigned as UK managing director of Text 100 in November.
Both had spent five years with their former employers, but had worked together at the Argyll Consultancy a decade ago.
Seven Hills, named after the seven hills of Sheffield where Hayman was born, claims to be a new type of agency, combining branding expertise, big creative platforms and social media techniques.
Launching this week, the consultancy has two additional employees: Jessica Depree, who formerly worked at MS&L, and Nicole Green, until recently a reporter at the Telegraph Group. All the staff - which Hayman and Giles intend to grow to 12 by the end of the year - will use the job title 'consultant'.
Seven Hills also has a non-salaried advisory board, which includes renowned corporate headhunter Carole Stone and the former broadcaster and Harrods public affairs adviser Michael Cole.
'We are the first significant post-recessionary agency to come out of the UK market,' claimed Hayman.
'We will provide a service that is a mix of consultancy advice and campaigning action. We will compete with bigger agencies by combining high-end consultancy but with a lower cost base.'
Seven Hills' launch clients include the former Dragons' Den entrepreneur Doug Richard, who has recently launched a School for Start-ups, project work for energy firm EDF, outsourced IT provider Adapt and the Creative Sheffield initiative.
Giles said Seven Hills would aim to emulate the success of independent agency start-ups such as Blue Rubicon, TLG in recent years, and Luther Pendragon and Fishburn Hedges in the longer term.