SAN FRANCISCO (Private Equity Week) - After selling his online ad company Tacoda to AOL for a reported $275 million a year-and-a-half ago, Dave Morgan figured he'd start to focus on backing other entrepreneurs.
That plan has fizzled out.
Last week, Morgan announced that he's raised a $4 million Series A round for a startup he has launched called Simulmedia. I'm too young to retire at 45, says Morgan, who raised the funding from Union Square Ventures and Avalon Ventures. And I realized that just investing in other peoples' businesses was not satisfying for me.
His work at Tacoda was no doubt satisfying for investors. Thomson Reuters data shows that prior to its sale to AOL, Tacoda raised about $32 million in funding, principally from Masthead Venture Partners, Rho Ventures and Union Square Ventures. Assuming the VCs owned 50 percent of Tacoda, they earned a return of 4.3 times their investment, which is above average these days.
New York-based Simulmedia, which is staffed with a number of former executives from Tacoda, focuses on helping television companies attract larger audiences by improving the way they target promotional spots for their programs.
To do that, Morgan says, the company will fuse a broad range of licensed and public datasets, from TV viewership records to weather histories. The company will use the data to create predictive models for TV broadcasters to determine the optimal time to air certain promotions and programing. Simulmedia says its technology will reduce costs for the TV industry, which annually spends more than $10 billion in cash and commercial time to drive viewers to new and existing programs. according to Simulmedia.
The idea, says Morgan, is to figure out the best times to draw new viewers. He cites the example of last week's snowstorm on the East Coast. With schools closed and many families homebound, television stations would have done well to incorporate a predictive system that showed viewers ads for on-demand children's programing. Parents with kids at home and no scheduled plans might've welcomed the suggestion.
In addition to weather, Simulmedia may incorporate factors such as the geographical locations of viewers, day of the week, consumer confidence levels, even demographic data based on ZIP codes. This is a similar approach to data-crunching taken at Tacoda.
Morgan says it is likely Simulmedia will begin offering services to TV programmers this fall. The company's business model is still a work in progress, though it will center on charging customers to run promotions using its targeting technology.
As for how consumers increasingly prefer to watch TV programing through digital video recording devices or online, Morgan is unfazed.
I think it will play in our favor, because the more ways you can get television content, the more need there will be for effective promotion, he says.
Simulmedia is one of several advertising-focused companies that have raised venture funding this year. Others include:
*Tremor Media, a developer of online video advertising technology, which raised $18 million in February in a round led by Meritech Capital Partners, bringing its total funding to $37 million.
*AdMob, a mobile advertising marketplace, which raised $12.5 million in late January from Northgate Capital and Draper Fisher Jurvetson, bringing total funding to $47 million, according to Thomson Reuters. The company's platform allows advertisers to target customers by country, language, carrier, phone brand, phone model, behavior and operating system.
*And Oodle, an operator of online local classified ads, which raised $5.6 million in February from Greylock Partners, Redpoint Ventures and JAFCO Ventures.