There can only be a single #1 recommendation platform for blogs: Outbrain Closes $5M A-Round

February 25, 2008

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Outbrain announced the closing of a $5M A-round investment today, led by Gemini Israel Funds and Lightspeed Venture Partners. Outbrain’s seed investor GlenRock Israel, also participated in the round.

Outbrain is a content recommendation and rating platform for blogs, news and RSS content. Outbrain’s star ranking widget (as seen on VC Cafe) allows users to grade the quality of posts in thousands of supported sites to the benefit of both the publisher and the reader. The publisher gets user feedback on his content and users easily find the gems within the noise by sorting through star-rated posts in RSS feeds. The widget is available for all the major blogging platforms, including: Blogger.com, TypePad, WordPress.org, Drupal, FeedFlare, MoveableType, etc. Get your free ranking widget here.

Outbrain was founded by serial entrepreneur Yaron Galai, Co-Founder of ad platform Quigo which was recently acquired by AOL for $300 million, and Ori Lahav (my former co-worker) who previously headed R&D teams at Shopping.com. I’ve published an interview with Yaron back in October, where he hinted on Outbrain’s plans to integrate advertising into the product. I’ve followed up with Yaron this weekend, to learn more about the impact of this announcement on Outbrain’s growth strategy.

VC Cafe: How are you planning to allocate the proceeds of this round?

Yaron: The investment will be used primarily for two things:

• Continue building the best content recommendation system for blogs, RSS and news. Making good, highly personalized, reading recommendations requires extremely complicated algorithms. We plan to accelerate our pace of innovation on that front and make sure we’re the #1 platform on the web for discovery of this type of content.

• Expand our distribution – Any collaborative filtering platform is as good as the data you feed into it. Therefore we want to continue expanding our network (which already serves millions of requests per day) by partnering with more bloggers, RSS aggregators, blog networks and blogging platforms. The investment will help us develop more comprehensive tools for each of these partners.

So essentially we’ll be putting a lot more effort on the R&D side after this investment.

Would you consider an acquisition as part of Outbrain’s growth strategy? Alternatively, what partners are you looking for?

Yaron: Re acquisitions – we’re absolutely looking to grow both organically and through acquisitions. There can only be a single #1 recommendation platform for blogs and RSS, and we have every intention to be that platform. As such, we will definitely look to acquire companies that can help us get there.
But the partnerships question is way more important because Outbrain is all about partnerships. We have decided against developing our own destination site, and instead are focused 100% on partnering with bloggers, RSS aggregators, blogging platforms, etc. We want to reach readers wherever they’re already used to consuming blog content.

We offer partners a simple 1-click widget that takes care of everything automatically, and an XML API for partners that require more control and customization of the ratings & recommendations. Both are absolutely free for partners.

I think that every company dealing with blog content today has to start getting serious about helping readers discover the most compelling content. Otherwise, they risk over-flooding readers with content and eventually driving them away. We offer partners an off-the-shelf discovery solution, which is absolutely free, simple to integrate, and has a mass of data that’s far bigger than most of them will ever have access to. I think that’s a pretty compelling package for partners.

In terms of funding, Outbrain was one of the first companies to be backed by the Lightsped/Gemini Internet Lab, which is dedicated to making seed investments in early-stage, Israel-related internet startups. Following this investment, Daniel Cohen from Gemini, Yoni Cheifetz from Lightspeed and Ziv Kop from GlenRock, will be joining Outbrain’s board of directors. Outbrain is headquartered in New York City, with its R&D based in Israel.