Is one of New York’s fastest growing ad tech startups the latest victim of fallout from Facebook’s disappointing IPO?A source that is well-known in the online advertising industry tells us he is getting calls from late stage investors researching AppNexus.
These late stage investors tell this source that AppNexus is in need of cash, and that it is looking to do one of two things in the near term: sell for $1 billion or raise money at a $800 million valuation.
In general, these investors tell this source they are interested investing in AppNexus, but only at a valuation closer to $500 million.
That would be a problem for AppNexus because $500 million is a lower valuation than some of its “preferred” investors – including Microsoft – bought into the company during its last fund-raise.
AppNexus is a company that people outside of the online advertising industry have a hard time understanding. It is a “real-time bidding platform.” It’s a place where ad buyers, ad sellers, and lots of middlemen like data providers and ad networks meet and move massive amounts of money and ad inventory.
Briefed on the details of this story, a source close to AppNexus tells us “I think what you’re getting is half accurate.”
This source says the company is well-financed, and merely keeping lines of communication open with investors.
We’re told AppNexus’s platform and the company itself are growing very fast. Right now, AppNexus is managing approximately 27 billion ad impressions per day, up from about 11 billion a year ago. Likewise, revenues transacted through the platform are up 3X year over year. Since the middle of 2011, headcount is up from 100 to 250. It should reach 1,000 in the next two years. AppNexus has offices in New York, Seattle, San Fran, London, Paris, and Tel Aviv. Spaces in Toronto and Hamburg are opening shortly.
AppNexus may be struggling to raise money at the valuation it wants due to fallout from the Facebook IPO. Many tech investors tell us the days of “trivialized billion dollar valuations” are over. We’ve heard rumours that Square and Spotify are also struggling to close investment rounds at massive valuations.
So what’s next for AppNexus?
About a year ago, Bloomberg reported that AppNexus was eyeing an IPO in 2012. That seems less likely now.
One industry we talked to raised an interesting alternative: AppNexus could skip this funding round and sell to Facebook, which has announced plans to build an ad exchange, but might decide its easier to buy one instead.