Magnetic Secures $4 Million In VC Funding

by , Jun 16, 2010, 12:10 AM
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Magnetic plans to announce Wednesday that it has secured a $4 million Series A round of funding led by Charles River Ventures, Ron Conway, and NYC Investment Fund. Along with seed money, investments now total $5.25 million. Previous investors include Founder Collective and IA Capital Partners, which also participated in the latest financing.

Ad retargeting company Magnetic, which integrates search data to retarget consumers' ads, will use the capital to build out its core search retargeting platform and expand on delivering new tools to advertisers and marketers that rely on display media and search data.

Magnetic Founder Josh Shatkin-Margolis, who officially launched the company March 22, says the company also has started selling data and media to advertisers and agencies. While the majority of advertisers that use retargeting go through DSPs and ad networks, some found that the process of buying data separate from media presents challenges.

"We're not a media holder, so we went to the data buyers like DSPs and ad networks and began buying media from the same companies that buy data from us," Shatkin-Margolis says. "Ultimately, we make money on the spread between the cost of the media we buy from the ad network or DSP and the amount the agency pays. But it makes it easier for companies to work with us."

The search data has attracted companies in the search engine marketing agencies, Shatkin-Margolis says. They often don't have relationships with DSPs and ad networks. They can come to Magnetic to work directly with them. The majority -- about 80% -- of Magnetic's business relies on selling data.

VCs don't hand out money without believing the company has potential for industrywide adoption. There has been a lot of interest in audience and behavior-driven online advertising focused on display ads, but that focus now moves to connect search data. Magnetic is a new take on an existing opportunity, according to ThinkEquity Research Analyst Robert Coolbrith.

"Venture capitalists think about the potential for customer acceptance over the long term," Coolbrith says. "Search is a very large market and there is clearly a desire to capitalize on the intent expressed by search behavior across a broader array of consumer interactions."

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