Peter Kafka

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Tremor Media Rounds Up Another $40 Million For Web Video Ads

Remember when the pre-roll — ads that run before Web video clips — was supposed to be on its way out? Somebody forgot to tell Tremor Media.

The video ad network, which makes most of its money selling pre-rolls, has raised a $40 million funding round led by Draper Fisher Jurvetson Growth Fund, along with DFJ and Triangle Peak Partners. Earlier investors including Canaan Partners, Meritech Capital Partners, and SAP Ventures are also onboard.

That money comes atop the $42 million the company has raised since its founding in 2006. And it’s just the latest in a series of big money bets on Web video, which may one day make good on its promise as the Internet’s next big money maker.

Tremor says it started turning a profit on its Web ads last fall, and I had previously heard that the company was an IPO candidate for 2010. This funding round will likely push that date back, CEO Jason Glickman acknowledged when I talked to him yesterday: “This year would be a very short time window”.

Instead, Tremor will use the money as a warchest to fund M&A, and perhaps to build out new product lines as well. Among the areas Glickman is interested in: Something that will let his company sell video advertising to “three screens” — not just PCs, but mobile phones and TV screens as well.

Tremor’s funding also serves, in a way, as a vote of confidence for Adobe’s Flash (ADBE), which powers most Web advertising and just about all Web video ads.

Tremor is moving to accommodate the HTML5 standard that Apple (AAPL) is pushing for its iPhone/iPad ecosystem. But Glickman’s shop is primarily a Flash one and he doesn’t see that changing anytime soon.

“Obviously we’re big believers in Flash,” he told me yesterday. “We’re taking a look at all the other standards are coming, and there’s clearly going to be something there with HTML5, but we’re not sure how big it will be.”