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Content Recommendation Outbrain Raises $35 Million

Outbrain had been reportedly planning a Wall Street IPO to raise $100-200 million at a company valuation of $700-800 million.

OUTBRAIN co founders

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Outbrain co-founders Yaron Galai and
Ori Lahav

Despite reports of a planned Wall Street IPO, content recommendation developer Outbrain has announced a new $35 million round of funding. The latest financing round was led by HarbourVest, with the participation of Carmel Ventures, Index Ventures,  Gemini Israel Ventures,  GlenRock Israel, Rhodium,  Lightspeed Venture Partners, and Vintage Partners. The company has now raised $99 million to date. Outbrain plans to use the additional capital to continue growing and developing its content discovery platform as well as expand further into international markets. The company already has 13 offices worldwide.

Outbrain CEO Yaron Galai said, “This investment comes at a pivotal moment in Outbrain’s evolution. We’ve matured from an upstart content recommendation company to a key player in the content ecosystem and a trusted partner for the world’s best brands and publishers.

Outbrain, which was chosen as “Globes” most promising start-up in 2011, had been planning to raise $100-200 million in a Wall Street IPO at a company valuation of $700-800 million. Galai spoke about the possibility on a panel last week at the “Globes”-Ernst & Young Journey Conference when he said, “This exit is for the investors. For me in the first five or six years you are still not full in the business. Only after that the fun begins. I hope that the investors will make an exit but meanwhile I’m enjoying it all.”

According to IVC, Outbrain posted $45 million revenue in 2011 and $80 million in 2012. Its revenue is forecast to reach $130 million in 2013. The growth is partly due to acquisitions, which should give it added value in its field.

Outbrain acquired Surphase in 2011. In 2012, it acquired Scribit, which provides a digital content management and storage solution, and in March 2013, it acquired Visual Revenue Inc., which helps content editors optimize content and its location on their sites.

The company was founded in 2006 by Galai and CTO Ori Lahav.

Outbrain has built a content recommendations engine based on advanced algorithmic, which appears at the bottom of news items and features on various content sites in Israel and other countries. The engine shows a number of recommendations on various articles within the site and elsewhere. The engine recommends articles on the basis of an analysis of the reader’s taste. In effect, it can keep the reader longer on the site, or direct him to another site. If another site is recommended, the site owner shares the revenue from the recommendation with Outbrain.

HarbourVest Partners principle Ian Lane said, “This is a company committed to providing value to readers and publishers through quality content. Outbrain is a clear leader in a growing and increasingly important part of the internet advertising marketplace. HarbourVest is excited to partner with management and current investors in the next phase of Outbrain’s growth”

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