Inc500 May 3, 2012
AdAge Digital
by Cotton Delo

In-App Advertising Company LifeStreet Media
Raises $66M

Private-Equity Firm Nautic Partners Is Sole Investor

A 6-year-old company that sells advertising for Facebook and mobile apps has secured a $66 million funding round, a sign that a gold rush for startups looking to innovate in the apps economy is under way.

LifeStreet Media was incorporated in late 2005 and secured two rounds of funding, each worth $1.8 million, in 2007. (Private-equity firm Nautic Partners is the current round's sole investor.)

LifeStreet's core business consists of partnering with social and mobile developers aiming to monetize their products by selling display-ad inventory within the apps. It has 77 employees and has been consistently profitable since 2007, according to founder and CEO Mitchell Weisman, who said that LifeStreet has paid out more than $100 million in ad revenue to developers.

LifeStreet CEO Mitchell Weisman
LifeStreet CEO Mitchell Weisman

The company acts as a middleman for more than 2,000 Facebook-, iOS- and Android-app developers and advertisers, including gaming companies such as Zynga, Big Fish Games and GameDuell, as well as nongamers like

The advertisers tend to be focused on spurring an action, such as user acquisition, and make deals with LifeStreet based on specific performance metrics, Mr. Weisman said. For instance, a gamer might agree to pay a certain amount for each returning user LifeStreet-powered ads garners, each new user in Brazil or each user who levels up.

LifeStreet's payout to app developers, or its "publishers," is based on ad revenue generated (rather than based on CPMs or being a fixed share of revenue), though the company would not provide specifics.

The in-app advertising business has been lucrative, according to LifeStreet. But the company has grander plans for the proprietary RevJet platform, which is where the $66 million capital infusion could come in. RevJet is currently being used to test hundreds of variations of an ad to determine, for example, which font or copy color is most likely to induce a user to click. That has implications for the display-ad business, as well as for optimizing e-commerce sites and social-gaming platforms.

Before homing in on what it perceived as a wide-open opportunity in the apps ecosystem in 2009, LifeStreet partnered with affiliate marketing sites to optimize landing pages for promotions.

"We think there are very large opportunities to apply RevJet to other digital experiences," Mr. Weisman said. "We think there's a case here for a public company in due time."

LifeStreet has already invested $25 million of revenue in RevJet, Mr. Weisman said. Its intentions for the new investment also include doubling its headcount by 2015 and creating liquidity for investors. LifeStreet is headquartered in San Carlos, Calif., and has offices in Moscow; Odessa, Ukraine; and Riga, Latvia.

The research firm Yankee Group forecasts that the global app market will expand to $35.6 billion in 2016 from $13.4 billion this year.