Federated Media (FM) has rumored to have raised $50 million from Oak Hill Capital Partners on a $200 million valuation, according to VentureBeat. Total funding for Federated Media to-date would be $57.4 million.
So what would Federated Media do with $50 million: Invest in sites. From a March interview:
Battelle: Well, I can’t say specifically what we might do with any money that we might raise, should we do a fund-raising round. But I think there are an awful lot of opportunities in this emerging field and it’s just good to have access to capital to execute any reasonable ideas that we might have. It’s a very quickly changing market and it needs financing. I mean individual sites need financing and we want to be a good partner for all of our sites.
Here’s what Michael said at the time:
Here’s what I think he really means: They’ll either buy sites outright, or guarantee revenue, or guarantee revenue in exchange for equity. A publisher wouldn’t consider Federated Media an attractive investor versus venture capitalists simply because it would mean tying their revenue to them over the long term.
VentureBeat talks about expanding the business and Facebook apps, but does FM really need more money to build out its core business? There’s every chance FM will be going down the Glam path in owning or part owning some sites and acting as the ad broker for others.
disclosure: FM sells ads for TechCrunch
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How are they going to exit at such a valuation?
I wish they would accept my site
Rumor
I’ve been impressed with FM’s latest campaign with Dell for Regeneration, case study here:
http://www.web-strategist.com/.....-campaign/
Why would a blogging ad network need that much cash (besides the fact they could raise it)? I am missing something here…
Makes no sense whatsoever. $50m round for acquisitions as a start up strategy?
And $200m valuation for Federated does sound wishful thinking, however, their numbers may justify it, who knows?
WOW! If true, I stand corrected. I said earlier that the CEO was an idiot for turning down $100 acquisition (if true).
I predict that either this deal or the soon to be completed TechCrunch funding will mark the end of the bubble. Ning will forever be seen as the peak, but I agree with James, this valuation seems unjustifiable.
Will, this is good news. Maybe they can hire staff to return calls. Obviously I’m receiving a message without a message.
FM’s business isn’t sustainable. Battalle saw a recession coming. This type of raise is the only way for him to convince his good people to stay. No one buys this company because there are so many companies to work with besides FM, especially since they do not possess a drop of proprietary technology or optimization techniques to help their publishers.
There’s a long, cold winter coming for them. Recession, lack of M&A interest in FM specifically, discontent among customer base, discontent among employees wondering why no one wants to buy their company. This all spells trouble so grabbing a huge chunk of money is the ONLY way to shield the company from reality.
I love the fact that Federated Media is moving beyond serving ads to big blogging sites like TechCrunch and diversifying into serving ads inside social networking applications. A very important player in the future of “appvertising.”