Peter Kafka

Recent Posts by Peter Kafka

Local Ad Start-Up Yodle Raises $10 Million C Round. What Does That Mean?

Venture capitalists and other investors are still willing to put money into Web/tech/media start-ups. But their terms are getting tougher, for obvious reasons. One start-up founder I talked to last week described his last round of funding, completed in December, as akin to “getting shot in the head.”

Bear that in mind as you read the press release announcing the newest round of funding for Yodle, a New York-based local advertising start-up. The company has brought in new investors in its C round–JAFCO Ventures and Draper Fisher Jurvetson Growth have joined DFJ and Bessemer Venture Partners. That’s good, because under conventional wisdom, the appearance of new money in these things validates the older money’s investments.

But the C round is also smaller than the B round from a year ago–the $10 million round Yodle is announcing is less than the $12 million it trumpeted in the fall of 2008. That bucks the traditional funding order, wherein each round is bigger than the last. So what does that mean?

Impossible to say until we hear more about valuation and deal terms, which I don’t have. Last year, people close to the company were floating a $40 million-plus valuation for the service, which connects mom-and-pop companies with the Web, via Yahoo (YHOO), Google (GOOG) et al.

That’s one of the great untapped sectors of online advertising, so if the Yodle folks can crack it, they deserve as much as they can get, downturn or not. I’ll report back if I get more info on the deal. If you feel like contributing your knowledge you can reach me at peter@allthingsd.com, or via the blind tip box here.


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