The Internet may have been battered when the bubble burst a few years ago, but the sector is far from dead. Sectors such as online advertising, which many thought was safely buried in the dot-com grave, have risen and are not only swallowing up venture dollars, they're growing.
The most recent example is BlueLithium, a San Jose, Calif.-based advertising network provider, which expects to announce this week that it raised $11.5 million in Series A funding. Walden VC led the round and was joined by 3i. Walden VC venture partner and chairman of BlueLithium's board, Rich LeFurgy, also invested. LeFurgy is co-founder of the Internet Advertising Bureau.
BlueLithium, which was founded only about a year ago, has earned a profit, says a company spokesperson. BlueLithium operates a network of more than 1,000 websites that reaches as many as 100 million unique users.
The company will use the funding to expand its sales and marketing efforts.
Meanwhile, other online ad companies continue to surge, led by the venture-backed behemoth Google Inc., which launched a multi-billion IPO last year and has grown to become the largest purveyor of online advertising. But other performance-based online ad networks are increasingly in the news. VC-backed Advertising.com (which American Online acquired last year), and VC-backed Fastclick (which is in registration for an IPO) have seen their sales grow. Meanwhile, more and more startups are getting into the mix and raising cash. Last fall, New York-based Poindexter Systems raised $8 million from Blue Chip Venture Co., WallerSutton 2000 and other investors.
There's no wonder more companies are doing battle in the Internet advertising space. Companies spent an estimated $8.5 billion last year on online advertising, compared to about $6.6 billion the year before, according to Jupiter Research.
Indeed, BlueLithium initially sought between $7 million and $8 million in funding, but the round continually became oversubscribed.
Founder and CEO Gurbaksh Chahal says that the company will continue to be profitable and is working towards launching an IPO within one or two years. Chahal, who founded Click Agents in 1998, became president and CEO of its acquirer, ValueClick, a provider of Internet advertising services, which launched a $66 million IPO in 2000.
Chahal says that trends point to growth in Internet advertising spending. And, he says, only a significant economic downturn that depresses ad spending would knock the company off course.
BlueLithium, meanwhile, has expanded is operations through acquisition. In November, the company acquired AdRevolver, an ad serving firm based in Minsk, Belarus. Financial terms of the deal weren't disclosed. But the transaction will help BlueLithium create an ad network across Europe and North America.