• by Mark Walsh  @markfwal, February 6, 2014

In-app video ad platform Vungle on Wednesday announced securing $17 million in a second-round funding led by Thomvest Ventures and including prior investors Crosslink Capital, Google Ventures, AOL Ventures, SoftTech VC, and Webb Investment Network. That brings the startup’s total raised to date to $25.5 million.

Vungle’s platform allows mobile apps and brands to run 15-second promotional videos within apps in its network of more than 3,000 titles. It boasts an in-house production capability for quickly creating HD-quality videos that serve as trailers for games and other apps.

With the new infusion of capital, the company plans to launch a mobile video ad exchange and introduce other tools for monetizing apps later this year. The Vungle Exchange would enable real-time bidding (RTB) for in-app video ads on a programmatic basis.

“Mobile video is really hard to get right—there are issues with serving, ad formats, device types, connection speeds. This is the first exchange to address those issues, built from the ground up to serve ads into an in-app environment,” said Vungle CEO Zain Jaffer.

Vungle says its existing ad network reaches an audience of more than 80 million unique visitors each month. Developers including BottleRocket Apps, Zeptolab (maker of “Cut the Rope”), Sega and HalfBrick (“Fruit Ninja”) use the Vungle platform to promote their apps.

A recent Gartner report suggested it will become increasingly difficult for developers to make money from apps through advertising or other means because of heightened competition and the shift away from paid apps. By 2018, the study estimated less than 0.01% of consumer mobile apps will be considered a financial success by their developers.

When it comes to mobile video advertising, an eMarketer report last year indicated that this is a fast-growing but still small market. The research firm estimated U.S. mobile video advertising overall will grow almost 80% to $924 million this year, and will reach $2.7 billion by 2017. But it will still make up less than 10% of all mobile ad spending.

In December, Vungle announced the hires of three executives previously at companies, including Microsoft and Disney, to fill key management roles. Among them was Arvind Gupta, most recently principal group program manager in Microsoft’s Online Services division, as vice president, product management.

Vungle overall plans to triple the size of its staff this year and expand internationally, with the opening of an office in Berlin and another in Asia in the coming months.