Ad network startup secures R15m VC funding for int’l expansion

Cape Town-based online and mobile advertising network Ad Dynamo has announced a second round of funding via venture capital firm Invenfin, the Remgro Group’s investment arm.

Its CEO, Sean Riley, says the capital will be used to fund Ad Dynamo’s “international expansion programme into key foreign territories”. Riley refused to discuss the funding amount but an insider close to the deal told Memeburn that the investment is in “the R15-million region”. The source claimed the new VC tranche would value the company at between US$8-10-million.

Riley famously took Google South Africa to the Competition Commission in 2008 in a David-vs-Goliath battle which saw the parties reach an out-of-court agreement. The issue attracted world-wide attention, including a blog post from reknown blogger Danny Sullivan of Search Engine Land.

Then Riley ran a web agency known as Entelligence. At the time, Riley alleged that Google was abusing its dominance and flouting the Competition Act by trying to poach a customer.

The local Google SA head resigned following the incident and soon after, Riley went on to create Ad Dynamo, his own contextual network advertising product, not too dissimilar from that of Google Adsense.

Remgro is chaired by South African billionaire Johan Rupert. Another investment company linked to Rupert, Reinet Fund S.C.A., recently pulled the plug on another promising South African startup, FireID. The mobile authentication company had been the recipient of around R48-million in funding.

International expansion for Ad Dynamo

Ad Dynamo now claims to represent over 5 500 websites and 1 300 advertisers across the world.

Countries included in Ad Dynamo’s international expansion strategy are Nigeria, Kenya, Egypt, Poland, Spain, UK, the Netherlands, Brazil, Columbia and Mexico. Although Ad Dynamo already operates globally in multiple currencies, it will now focus on establishing a physical presence within each priority market.

The country selection sees a mix of emerging and developed economies.

“Whilst emerging markets represent great opportunity for Ad Dynamo, the reality is that the commercial decisions about where budgets are directed are principally still led from developed countries,” says Riley.

Ad Dynamo will introduce its performance advertising product (contextual advertising) for mobile and web to all markets and its display advertising product (The Premium Marketplace) will be introduced to selected markets.

The company’s first round of VC was also via Invenfin. The fund then invested an undisclosed sum for a 35% stake.

“This next round of funding is significant and shows strong support and commitment on Invenfin’s part, and will enable the business to execute its strategic objectives over the next year,” says Riley.

“2010 saw Ad Dynamo achieve some real progress, including the introduction of our mobile advertising platform and activation of seamless international trading. We are well positioned to develop Ad Dynamo into a globally recognised contextual advertising marketplace over the year ahead.”

Remgro Group’s Jannie Durand added: “Our group has a passion for investing into early stage innovation and intellectual property led by vibrant entrepreneurs, and I am pleased with how Invenfin is carrying out that mandate. Ad Dynamo fits that bill and Invenfin is pleased to have been asked to provide its next round of funding, as we’re excited by Sean’s plans for Ad Dynamo.”