Funding Monday continues. NY/Israeli startup Outbrain is announcing a $5 million series A financing, led by Gemini Israeli Funds and Lightspeed Venture Partners. GlenRock Israel also put money into the round. The company was founded by Yaron Galai, a co-founder of Quigo (recently sold to AOL for $340 million), and Ori Lahav, previously a technologist at Shopping.com. It raised a $1 million seed round last year from Lightspeed’s and Gemini’s joint Internet lab in Israel, LGiLab, which is managed by TechCrunch France editor Ouriel Ohayon.

Outbrain is creating a ratings and recommendation platform for blogs and news feeds. So far it has developed a rating widget that can be placed at the end of every blog post or news feed item so that readers can rate each one. Outbrain wants to use these widgets to create a cross-blog/news recommendation system using collaborative filtering techniques similar to what you find on Amazon.com for products. “Readers like you also liked:” X. Nobody has to register. Outbrain makes its inferences anonymously based on cookies. Explains Galai:

With every rating that’s cast to our system, we constantly tweak the ‘closeness’ of each reader to all other readers who ever rated anything. We then give your like-minded readers a higher weight when making recommendations for you. So the more items you rate (and rate honestly), the better your personalized recommendations should get.

This is in contrast to the folks that do ‘related articles’ functionality which is based purely on the content of the post. Those by definition are one-size-fits-all recommendations which we do not believe are very effective. So while others try to target recommendations that are relevant to the content, we are trying to target recommendations that are relevant to the readers.

Outbrain’s widget can be installed on most blogging and RSS platforms, including Blogger.com, TypePad, WordPress.org, Drupal, FeedFlare, and MoveableType. Bloggers can grab it here. It competes with other rating and recommendation widgets out there, including JS-Kit’s rating widget and Criteo’s Autoroll widget that creates reader-centric blogrolls.

French startup Criteo just raised $10.4 million (7 million Euros) in a B round from Index Ventures, reports TechCrunch France. This is on top of a 3-million-Euro round in April 2006 led by AGF Private Equity and Elaia Partners.

Criteo sells recommendation-engine software to e-commerce and content sites. Competitors include Aggregate Knowledge, CleverSet, and ChoiceStream. Discovery is hot right now. For instance, Kleiner-backed Aggregate Knowledge has raised $25 million. It is good to see some competition stirring across from across the pond.

Incidentally, Criteo is probably best known among bloggers in the U.S for its AutoRoll widget that generates a linkroll based on the reading habits of a blog’s readers. Any blog that has the AutoRoll widget on it will show the other top AutoRoll blogs that its readers have also visited. There are 12,000 blogs with the AutoRoll widget (I used to have one on my old blog, the Next Net). It is an interesting idea, but hasn’t quite reached critical mass yet. Good thing the AutoRoll is not Criteo’s main business driver.