Quattro Wireless of Waltham, MA, announced today that it has raised $10 million in new venture funding to help expand its mobile content and advertising network. Despite the withering economy, Quattro hit a “hockey stick” in customer acquisition and revenue growth in late 2008 and needs the money to invest in sales, marketing, and technology efforts and move into international markets, according to CEO Andy Miller. (See below for our Q&A With Miller.)
The Series C investment round, led by existing investors Highland Capital Partners of Lexington, MA, and Globespan Capital Partners of Boston, brings the company’s total funding to $28 million. Quattro closed a $5.75 million Series A round at the time of its launch in the summer of 2006, and a $12.2 million Series B round in September 2007.
Overall, the amount of content available for consumption on mobile phones is growing faster than the advertising market can keep up, leaving many mobile publishers without as many high-paying ads as they’d like to run. But the continuing expansion of major online brands into mobile channels—meaning, websites optimized for access from mobile browsers, as well as text messages and video—means that, in general, the mobile advertising business is one of the economy’s few bright spots, Miller told me in an interview this morning.
“We have a lot of great brands in the network…and that has brought us real reach,” Miller says. “It has helped us evolve into a premium network, with some super content. And the whole idea is that if you match content with specific targeting, you will get an engaged audience”—in other words, an audience that’s more likely to click on the ads shown to them—“which is part of what has made people excited about mobile.”
Bob Davis, a general partner at Highland Capital Partners, made a similar point in Quattro’s official announcement of the C round this morning. “Globally, mobile is increasingly attracting premium ad dollars because of its advantages over online,” Davis said in the announcement. “Within mobile, there’s a flight to quality and advertisers continue to choose Quattro’s premium ad network and targeting solutions over lower performance alternatives.”
The declining economy and the destruction it’s wreaking on investors’ portfolios caused a few complications for Quattro as it attempted to close the latest round, Miller says. But in the end the company was able to raise the funds needed to expand and market its services, which focus on converting existing Web content for display on mobile platforms, and serving up targeted, interactive ads alongside that content.
[A note to followers of the local mobile industry: Quattro Wireless chief technology officer Eswar Priyadarshan will be among the speakers at Xconomy’s upcoming forum on The Future of Mobile Innovation in New England, to be held April 7 at Microsoft’s New England R&D Center in Cambridge.]
Here’s the full text of my interview with Miller.
Xconomy: How hard was it for you to raise this latest $10 million, given the economic situation?
Andy Miller: We had an interesting ride. We closed the round a little while ago, and are just announcing it now. But we really went through the gamut. We had a lot of interest at a pretty high valuation, right before the market started to tank. Then we had some VCs getting nervous about advertising in general, but still liking our business. We were fortunate that we had lots of interest before the market crashed. After, it was just a change of terms, and how much ownership people wanted.
I think people’s investment profiles have really changed, but mobile advertising has been a good space. I don’t think anyone knew that 2009 would be such a great year; that despite the recession—and maybe because of the recession—this might really be the year for mobile advertising. Marketers are really looking at where their dollars are going, and can they do fine-grained targeting, and mobile has all those things. Now that a lot of folks are trying it, they’re finding that
