Travel Ad Network Raises Series A

Travel Ad Network (TAN), the largest vertical ad network in travel, just closed a $15 million Series A round of financing led by Rho Ventures, Village Ventures and individual investors. And what a Series A it is! $50-$75 Million valuation, estimated in my deal radar post and commensurate with the trends in the industry set in motion by Glam, presumably minimum dilution.

Prior to this round, the company had raised minimum financing. In June 2007, Michael Thomas, an online travel investor and entrepreneur, invested around $1.2 million in TAN. It was the first and only time TAN raised any outside money since its inception in 2003. The company is largely bootstrapped. Michael Thomas must be a very happy man!

I interviewed Cree Lawson recently, and was thoroughly impressed by how frugally and intelligently he is building the company.

In my Vertical AD Networks: Evolution piece last week, I said that the best valuations in the space are being awarded to those that bring together a host of services and business models.

Following that thread, Travel Ad Network’s options are to either roll up some travel publishers, or merge with a Vertical Search company. Kayak is rolling up Travel on one side, and has recently acquired SideStep. Mobissimo is still independent, and is also a bootstrapped company which has been run frugally, by a capable entrepreneur, Beatrice Tarka. You can read her recent interview series here.

Steve Hafner, Kayak’s CEO, stated clearly that a vertical ad network is definitely in his plans. However, TAN’s value proposition for Kayak may not be as strong because Kayak wants to get into very specific targeting algorithms derived from its search queries.

Mobissimo, however, is similar in size to Travel Ad Network, and it would be more a merger of equals, and the recently raised $15 Million in cash that TAN has would suffice to move them forward.

At any rate, exciting times for the industry, and I am thrilled to see a set of meaningful competitive forces developing that will, one day, challenge Google AdSense, the crappy ad network from the world’s greatest company!