In the world of news media these days, there’s no getting away from two things: online advertising, and hyperlocal sites. Where they meet is a company called DataSphere in Bellevue, WA.
On Tuesday, we reported that DataSphere had raised $10.8 million in Series B funding. The investors in the new round are Ignition Partners, also based in Bellevue, and two unnamed publicly traded companies, which are strategic investors. Ignition and one of the public companies previously invested in DataSphere’s $6.5 million Series A round back in July 2006.
DataSphere, which was called SecondSpace until last year, has been collaborating with media companies like Fisher Communications and Cowles California Media to help them roll out hyperlocal (neighborhood) websites, about 150 of them across five states: Washington (including 46 sites based in and around Seattle), Oregon, Idaho, California, and Rhode Island. DataSphere’s technology platform organizes website information, makes it searchable, and connects local advertisers with local sites and consumers. (You can check out the DataSphere-powered search capabilities and hyperlocal sites and ads at KOMOnews.com, for example.)
One outside observer thinks DataSphere is pretty interesting, but wonders about the size of the market from a VC’s perspective. “It’s a smart group of guys and investors,” says Lucinda Stewart, a managing director at OVP Venture Partners who focuses on online advertising, among other sectors. “They need to prove out the business model a bit more.”
The company currently has more than 70 employees and is led by chief executive Satbir Khanuja, a seven-year Amazon.com veteran who holds a PhD in ceramics engineering from MIT. (He has been in the business world long enough that he doesn’t sound like a PhD—probably a good thing.)
I had a good chat with Khanuja earlier this week about his company’s technology and business strategy. Here are some edited highlights:
Xconomy: Can you explain how DataSphere is new and different, in a nutshell?
Satbir Khanuja: The overall idea for us is to create a compelling hyperlocal experience for users and advertisers. We are collaborating with local media companies and leveraging their brand equity they’ve built, and applying our technology platform. In a traditional site, the [ad] inventory is accessible only to medium and large advertisers.
What we do is, let’s take all your news and show it in a contextually relevant way to all of the user base. You choose your neighborhood as a default site. We show that user a specific user experience. Now we have the ability for local advertisers from that neighborhood to show ads to only those users.
X: How does your platform and revenue model work? And how are these hyperlocal sites doing?
SK: If you work with one of the media companies, they already have the resources. We’ve created a forum and platform with them to have a conversation with their user base throughout
