Spongecell Gets $10M Series B, Continues Growth in Ad Tech
In the fast-evolving advertising arena, Spongecell is a prime example of how a hard pivot with different technology in place can transform a company’s fortunes.
On Tuesday the New York company, which adds interactive functions such as video and Twitter feeds to banner ads, announced it raised $10 million in a Series B round led by Safeguard Scientifics. Spongecell CEO Ben Kartzman says the new funding will go towards product development and other needs. More importantly, though, Kartzman also says Spongecell more than doubled its revenue last year compared with 2010, as he previously expected.
As Spongecell fills its coffers, grows its staff, and expands into new territory, it is hard to imagine that four years ago the company was running out of cash, letting employees go, and searching for a new direction.
Spongecell’s current technology transforms static banner ads into more interactive tools to engage consumers. In addition to Twitter and other social feeds, Spongecell can insert video, maps, coupons, and other features in the ads to grab attention. For example, when users mouse over banner ads for the Mini Cooper the ad plays a video clip that promotes the car. “Video is the fastest-growing segment of the online ad space,” Kartzman says.
Including the latest funding, Spongecell has raised about $14 million in total from backers that include Google executive chairman Eric Schmidt. In 2010, Spongecell generated $3.8 million in revenue and Kartzman says the company more than doubled that figure in 2011, though he declined to give specific numbers.
That is a much different tale compared with Spongecell’s early history. The company, founded in 2006, initially offered a widget platform for ad agencies to use for online promotions. When that did not bring in enough business and Spongecell’s cash ran … Next Page »