• by Joe Mandese  @mp_joemandese, November 15, 2013

MdotLabs, a start-up developing software to help advertisers, agencies, trading desks and demand-side platforms detect and defend against traffic-bots -- fraudulent non-human traffic to online advertising generated by machines -- has closed on a first round of venture funding, raising $1.25 million. The round, which was led by Chicago Ventures and New York-based Great Oaks Venture Capital, also included prominent angel investors such as Ray Zemon, founder of Amazon's ShopBop.com.

MdotLabs was spun out of Broadcast Interactive Media earlier this year, and says it will use the funds to “grow our data scientist and software development teams.”

"Our research and resulting technical papers show that fraudulent impressions are estimated to account for 20-30% of overall online ad traffic,” Chief Scientist and co-founder Paul Barford said in a statement announcing the new funding. "And we also know that the types of fraud are evolving and changing very quickly, which is why we've taken a security-systems approach to what is essentially an arms race.”