Israeli Startup Outbrain Launching Wall Street IPO

In going the IPO route, the content discovery platform is joining a growing list of Israeli companies in New York and London.

TheMarker
TheMarker
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Yaron Galai, founder of Israeli startup Outbrain
Yaron Galai, founder of Israeli startup OutbrainCredit: Noam Galai
TheMarker
TheMarker

Outbrain, the Israeli startup that enables web publishers to recommend content from other websites, is planning to raise $100 million in an initial public offering in the United States that would value the company at more than one billion dollars, The Financial Times reported Thursday, attributing the news to two knowledgeable sources.

Outbrain, which is headquartered in New York and has research and development facilities in Netanya, has appointed Goldman Sachs and J.P. Morgan Chase as underwriters for the IPO, the London-based Financial Times reported. But the company declined comment about its most recent IPO plans.

Rumors about an impending IPO by the company surfaced last autumn, but the company instead raised $35 million from venture capital funds, valuing it at as much as $350 million and prompting speculation that Outbrain had decided to put off an IPO for the time being.

In going the IPO route, Outbrain is joining a growing list of Israeli companies in New York and London. Bagir, the clothing manufacturer, and the digital advertising firm Matomy Media Group are both planning flotations in London. The American-Israeli retailer support startup Borderfree and the biotechnology company MediWound both wrapped up successful flotations in New York this month, but website builder Wix this week withdrew a planned secondary offering.

Outbrain’s technology is used by websites to recommend other content and links the reader might find interesting, the idea being to keep readers on the site and increase traffic. The company allows advertisers to distribute marketing content alongside the recommendations, and has revenue-sharing agreements with a number of high-traffic sites including those maintained by USA Today, Boston.com, the Chicago Tribune, the Washington Post, Slate, the Daily Beast, CNN and Fox News.

Formed by Yaron Galai, one of the founders of Quigo, a startup sold to AOL in 2007, and Ori Lahav, formerly of Shopping.com, Outbrain had $100 million in sales in 2013.

Its investors, which include Carmel Ventures, Index Ventures, Gemini Israeli Fund, GlenRock, Rhodium and Lightspeed Venture Partners, have put some $99 million into the company since it was formed in 2006. Private investor Zohar Gilon participated in the second round of funding.

The company’s approach, which generally involves placing a feature at the bottom of a Web page that suggests that the reader may also be interested in another featured article, has come in for criticism, the Financial Times noted. Its detractors have suggested that the company is obscuring the distinction between advertisements and editorial content .

Its detractors have suggested that the company is obscuring the distinction between advertisements and editorial content..

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