In a deal rumored to be worth $500, Facebook just made its ad business a whole lot bigger after acquiring video ad tech startup LiveRail.
The San Francisco-headquartered startup was founded in 2008 and has built considerable success for itself since then. Its supply side platform links marketers with publishers on mobile and web to target video ads to a colossal 7 billion visitors every month. Even the most battle-worn account manager and seasoned art director would concede that that’s a pretty impressive reach (LiveRail is widely considered the third largest video ad seller out there at present).
Just over a year ago, the startup raised $4 million in Series C, largely through its lead investor San Jose-based Pond Ventures, bringing in its total investment to $12 million. And it’s been doing exceedingly well, hitting a $100 million revenue run last year, a figure representing year-on-year growth of 300 percent. Again, even the most hard-nosed account manager might experience an involuntary drop of the jaw at numbers like that.
Although Facebook has so far remained button-lipped about the price-tag for the deal, with a business record like that, the $500 million figure seems more than credible, meaning that Pond must be uncorking the champagne and that Facebook had to come up with a serious cash offer for the dealt to go ahead.
A safer bet than IPO
LiveRail’s customer base includes ABC Family, A&E Networks, Dailymotion, Gannett and Major League. Its publishing clients make money by using its platform to rout relevant video ad messages to prospective customers (as well as publishers, the platform also helps marketers link with apps and sites with open video inventory). LiveRail’s system approaches buyers through real-time bidding auctions, processing complex upfront deals sans all the tedious paperwork that so often slows campaigns down to a crawl when a sprint is needed. It also deftly block.
The Facebook intervention has spared LiveRail the prospect of an IPO, which it was reportedly considering this year. And after the IPO mullering of competitors like YuMe (which bebuted at $9 and crashed to $5.95) and Tremor Media, which IPO’d at $10 and nosedived to $4.61, the new deal has safely avoided a far riskier alternative.
LiveRail’s executives are probably at the champagne, too.