In a world that suffers from content overload, personal recommendations are a bare necessity. Israeli startup Outbrain, one of the leading companies in the recommendations space, has completed a $35 million in Series D led by Index Ventures and joined by previous investors Carmel Ventures and Lightspeed Venture Partners. This brings Outbrain’s funding to $64 million total since its inception in 2007.
Outbrain has been showing solid progress on its content recommendation plugins (also visible on VC Cafe). Outbrain’s plugins enable content publishers to provide related content recommendations that result in higher engagement by the user. According to the company, these recommendations get 3.5 billion views a month, generating more than 200 million clicks a month for large content providers such as CNN, Fox News and MSNBC. Outbrain has also managed to find a business model with OutLoud, its sponsored recommendation product, which offers publishers a cost effective way to distribute their content on Outbrain’s publisher partners.
According to the company blog post on the funding, the funding will enable Outbrain to expand its recommendation coverage into video and mobile sites, increase language coverage and grow the team in markets overseas. It’s possible that Outbrain will also continue to grow through small acquisitions, similar to Surphace, an Israeli startup in the content recommendation space that Outbrain bought from AOL in Feb 2011.
If you ask me, the deal was as much pull from Outbrain as it was a “Push” from Index. Saul Klein, partner at Index, has been living in Israel for the past year or so, looking for the Israeli companies that have a potential to exit for $1 Bilion. That said, Dominique Vidal was the lead on the deal, and will be joining Outbrain’s board of directors. Outbrain’s solid team, led by serial entrepreneur Yaron Galai (sold Quigo to AOL for approximately $340 million) and Ori Lahav, who is becoming a thought leader CTO in Israel.
The main challenge to Outbrain will come from smaller competitors like nRelate.com, who are reporting similar CTRs on their recommendations, have a growing number of publishers and much less funding. eBay’s acquisition of Hunch for $80 million a month ago and this large round for Outbrain likely means good news for content recommendation startups, as VCs will ‘place their bets’ on other companies in the space.
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