Polaris Leads Two Big Digital Media Investments: Beats Out Sand Hill VCs for Quantcast Deal
In case you hadn’t noticed it, blogging and online advertising are growing fast—and they’re converging. And the digital media folks over at Polaris Venture Partners seem happy to bring that convergence about. Tuesday brought news that the Waltham, MA-based firm had taken the lead in a $20 million Series B round investment in online audience measurement service provider Quantcast. On Wednesday came word that Polaris had also led the way—joined by a group of investors that included the New York Times Company—in a $29.5 million Series B financing of Automattic, creator of the WordPress platform on which Xconomy and other blogs depend.
There was another type of convergence to the deals, says Mike Hirshland, a Polaris general partner behind both investments. He says the two actually fed into each other—in the sense that Automattic’s (and other Polaris portfolio companies’) increasing use of Quantcast’s services went a long way toward validating that investment. “The really fun thing about Quantcast is our portfolio ended up doing diligence for us without us really being involved,” he says. The deal was also fun because Polaris, an East Coast firm, beat out some big West Coast VCs for the pleasure of investing in Quantcast (more on that in a bit).
Quantcast is a San Francisco-based provider of direct audience measurement services for buyers and sellers of online ads. Under the deal announced on Tuesday, Polaris put in $10 million of the $20 million round. Founders Fund (also of San Francisco), which shared the lead, put up the other half, along with some insiders.
Hirshland says that over the last year or so he started hearing the phrase “our Quantcast numbers” at more and more board meetings. “My portfolio companies just on their own initiative had identified and validated this one company as being the kind of defining solution for what’s a very significant problem in the industry—how can everyone keep measuring apples to apples in terms of sizing audiences,” he says. Hirshland believes that Quantcast has “the potential to be very important part of the Internet advertising ecosystem.”
The Polaris partner also said several big Silicon Valley venture firms tried to land the Quantcast deal. “It became a very competitive deal, and a lot of the premiere Sand Hill Road VCs were very interested in investing,” he says. One thing he thinks distinguished Polaris from the pack was its national media view and presence. “We really spend a lot of time in New York with the media industry and think that we can bring to a Silicon Valley startup some real industry knowledge and relationships,” he says. “We think that the management picked us in large part because of that.”
Automattic (also based in the City by the Bay), whose WordPress site hosts more than 2 million blogs and claimed some 100 million unique users last year, was an even bigger deal for Polaris, which put in $20 million of the round’s $29.5 million. Hirshland declined to specify the stakes of the other investors, except to say that True Ventures “did the largest amount of the other three. They are definitely the second largest in this round.” After that came The New York Times and Radar Partners, though not necessarily in that order.
Other firms in Polaris’s digital media quiver include BlackArrow, JibJab Media, Heavy, and Turbine Entertainment.