Web start-ups that plan to make money from advertising are having a rough time raising money. But Web start-ups that say they’ll do it by charging customers something? Still possible.
Today’s example: OMGPOP, the casual gaming site formerly known as iminlikewithyou, which has raised a $5 million in a round led by Bessemer Venture Partners.
Dave Morgan made his reputation, and fortune, by building RealMedia and Tacoda–two pioneering Web advertising technology companies. So it’s no surprise to see him launch another ad start-up. But it is surprising to hear about the market he’s targeting: TV ads for TV shows.
See! Twitter did have news to report this week–but not about its elusive business model. The Web 2.0 microblogging-messaging platform everyone (or at least some of us) loves to obsess about has raised another $35 million.
Remember the good old days of Bubble 2.0? When a webby company with no real business plan could raise piles of money at an eye-popping valuation? Those days haven’t gone away for Twitter, which is raising another $20 million or so in a deal that will peg the company’s worth at $200 million or more.
The billionaire investor explains why a recession is an excellent time to invest in start-ups–and how to manage a Gmail account that gets up to 5,000 messages a day. He’s also got a request for Google CEO Eric Schmidt.
Raising more money for an online advertising start-up in a recession is a good thing. But raising less money than you did in the previous round will raise some eyebrows.
Twitter’s executives and investors tend to roll their eyes when people ask them when they’re going to start, you know, generating revenue. Maybe that’s because there’s a really obvious answer: Start collecting money from the many companies that are using Twitter’s infrastructure and service to create their own businesses. Newest example: StockTwits, a Twitter-based bulletin board/chat room for individual investors
BlogHer, a women’s ad network/publishing network and conference organizer, is cutting the amount it pays to its blog partners by 10 percent. That’s really sort of a double cut, since the blog owners/writers in its network get paid based on the ads BlogHer can sell, and ads are already under pressure.
Tumblr is exactly the kind of start-up that’s supposed to be gasping for air in today’s dismal economy: A trendy but niche Web service with a prominent founder and exactly zero revenue. Instead, it has raised a $4.5 million funding round from Union Square Ventures and Spark Capital, which values the company at around $15 million.
The purse strings haven’t completely closed for start-ups looking to raise money–even niche Web sites that hope to stay afloat by selling advertising. Wowowow.com, a site launched earlier this year, which targets women over 40, has raised a $1.5 million round led by Bob Pittman’s Pilot Group and the Rime Group.
TheStreet.com is worth about $100 million. So is The Huffington Post. But investors are much more optimistic about one of these Web businesses.
The myth of professional investors like venture capitalists is that they’re not like us: They’re smarter, they can see around corners, and they’re bold when we are quivering. Or maybe they’re just like us: When their 401ks gets crushed in a once-in-a-lifetime market rout, they think twice before writing another check. That appears to have happened in October, when VCs spent less money, on fewer companies, than they have in years.
If you’re not paying attention, it may seem as if the cratering economy hasn’t stopped the steady stream of start-up funding announcements.
CrispyGamer, a newish videogame site, for example, just announced that it had raised $8.25 million from J.P. Morgan’s Constellation Ventures.
But unless it can figure out how to boost its ad rates, it’s going to need every penny.
Peter Kafka has been covering media and technology since 1997, when he joined the staff of Forbes magazine. Most recently, he has been the managing editor of the tech and media Web site, Silicon Alley Insider. Read more »
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