In the case of
Fastclick and DoubleClick, they share much more than they
differ. The former has followed a similar life cycle in
almost the same market. Fastclick enjoys the distinction of
being one of the premier internet ad networks, an area
Doubleclick pioneered before choosing to focus on its market
share leading ad serving technology. Also similar to
Doubleclick, Fastclick too has worked hard to increase the
amount of market share its third party ad serving solution,
adserver.com, has. Unlike DoubleClick though, Fastclick kept
its media buying focus during the slump and has benefited
from their steadfast persistence.
Having been named a Deloitte and Touche Fast 500
Rising Star, Fastclick has been able to gain some outside
validation for its strong industry performance. Their
funding, and the amount of it, only adds to that validation.
Highland Capital Partners, who led the financing, has made
many other investments in the online advertising space,
backing such companies as ClubMom, Topica, Performix, Quigo,
Coremetrics, and VistaPrint. The former CEO of Lycos and
partner with Highland, touts Fastclick’s “leadership
position” and “results-driven solutions.” It is an
interesting mention given Fastclick’s historically CPM only
business model, suggesting perhaps a belief that more growth
lies in the ad serving market.
The $75 million in financing
probably helped Fastclick’s founders liquidate some of their
equity. What specifically the remaining money will be used
for is hard to say – growth through greater R&D, perhaps by
acquiring another player in the field. Chances are, while
profitable, Fastclick did not amass a stockpile of cash.
While Doubleclick “only” does $75 million quarterly in
revenues, their stock did stay at $100 for the better part
of the year. Were Fastclick to do anything similar, that
would make for a good return on investment for Highland
Capital Partners. Given Fastclick’s advertiser and publisher
base, it will be very interesting to see how much
collaboration takes place between them and some of the other
technology innovators in Highland Capital’s portfolio.
While never in doubt,
Fastclick’s future certainly became more secure with this
financing. Another company that also survived and innovated
in a highly competitive marketplace is Netblue. Formerly
YFDirect, the free DVD site, Netblue hardly resembles the
company that most knew them as in 2002. Like Fastclick,
Netblue’s funding came perceivably to enable strategic
growth given their status as a highly successfully, growing,
profitable company. And similar to Fastclick, they too
received a sum that even in boom days would generate praise
and respect - $20 million.
The $20 million represents the
first round of institutionalized funding for Netblue. It
just so happens that their investor was among the others
that raised the $75 million for Fastclick. Netblue employs
70 people and has achieved all their growth in a little
more than two years. What stands out the most though is what
Netblue’s financing means for our industry. Netblue relies
on two of the more controversial aspects to online
advertising – registration paths and incentivized ads. In
many ways, the financing helps legitimize these common but
often misunderstood forms of user acquisition.
To see the funding that has
occurred is a great sign – not only because it points to the
overall success and respectability of our industry, but also
due to the nature of the funding. As mentioned previously,
both companies didn’t need the money to stay in business;
instead, and this is typically the case in more mature
businesses, the funding catalyzes growth. The only people
for whom these recent rounds of funding might not benefit
are Fastclick’s and Netblue’s competitors. Certainly many in
our space though will benefit greatly.
Jay Weintraub
