Peter Kafka

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Video Ads + App Ads = Vungle, a Freshly Minted Start-Up With a Big Pile of Cash

The video-ad business is growing quickly. Mobile ads, even more so.

And if you combine the two? You get Vungle, a barely hatched start-up that just raised a $2 million seed round.

Vungle’s pitch is straightforward: They help app developers make video promo reels for their stuff, and turn them into “in-app” ads (you can see a sample below). There are a whole lot of ways to buy in-app advertising for other apps already — it’s a big chunk of the mobile ad business right now — but the Vungle guys argue that they make it easy. And that unlike iAd, AdMob, Millenial, etc., it’s all they do.

Fair enough. No way to really tell now, as the company is only in “alpha,” with a handful of paying customers that include Path, the buzzy next-gen social network, and Pocket Games, a game developer. A more open beta comes this summer.

At least as interesting as the pitch is the backstory, which has co-founders Zain Jeffer, 24, and Jack Smith, 23, leaving London on a whim to join the AngelPad start-up factory last fall, then finding themselves in a whirlwind round of financing. For instance, they pitched Crosslink’s David Silverman at his home on a weekend, and got a commitment a day later.

Multimillion dollar seed rounds would have been unheard of a couple years ago. Now they’re increasingly commonplace (here’s one for $4.2 million), at least for a certain class of incubator-blessed start-ups. And they’re part of the reason that you’re hearing lots of bubble talk right now.

For the record, the Vungle guys say they had no intention of raising so much out of the gate. But “as soon as you tell people you don’t want money, that’s when they want to give you money,” Smith says. Among those chipping in: Google Ventures, AOL Ventures, Ron Conway, Dave McClure, Charles Hudson, Maynard Webb, Scott McNealy and Tim Draper.


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