Federated Media Raises $50 Million (and a Few Eyebrows)

Posted by: Rob Hof on April 15, 2008

There’s money in blogs after all. Ad network Federated Media, which aims to help blogs and other online sites create the new generation of media giants, announced this morning that it has raised $50 million from Oak Investment Partners. Though the company, founded by Industry Standard founder John Battelle, isn’t confirming the $200 million valuation that a number of blogs are citing, Oak’s position will be a minority one, so it’s clearly a hefty valuation—maybe more than its business deserves, according to some observers such as Sramana Mitra and Private Equity HUB’s Dan Primack.

The company’s sales rose from $4 million in 2006 to $22 million last year, and expects to “beat that by a substantial margin” this year, perhaps to $60 million by some accounts, which seems like impressive growth in these times. Federated says it has been profitable since last year’s third quarter (updated).

What’s it going to do with all that money? TechCrunch speculates that it may buy various blogs or at least take equity stakes. Chas Edwards, Federated’s publisher and chief revenue officer, told me the money would be used both to expand Federated’s existing business largely in tech-oriented blogs such as BoingBoing and Ars Technica—actually, he calls them “coversational media” brands—and to move further into more cooking, parenting, automotive, and other brands, internationally as well as in the U.S. The company also plans to expand its array of marketing services. For advertisers, Federated’s trying to offer an alternative to other ad networks that Edwards contends serve direct marketers well, but not brand marketers.

In any case, Federated’s now got a war chest that should last long enough to give it a shot.

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Reader Comments

Sramana Mitra

April 15, 2008 05:32 PM

"—and to move further into more cooking, parenting, automotive, and other brands, internationally as well as in the U.S."
- This spray and pray strategy is exactly what they should not do.

Sramana
www.sramanamitra.com

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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