Deal Radar 2008: Kosmix+Adify – Potential Google Challenger

Kosmix is a vertical portal startup. Founded in 2006 by Anand Rajaraman and Venky Harinarayan, founders of Junglee, this site aims at creating a ‘Home page for every topic’. Featured Kosmix sites are RightHealth, RightAutos and RightTrips focusing on health, autos and travel verticals. They have also been working on other verticals like politics, finance, video games, etc. with a view to eventually integrate all of them under one search box that would pick the right vertical for a page. [You can read my interview with Venky here.]

Kosmix’s technology is based on a highly sophisticated algorithm-based categorization engine. By generating every page algorithmically, Kosmix aims at creating rich and relevant home pages for any topic. This taxonomy-based search is dramatically different from Google’s keyword and page rank based approach.

Their series A funding was to the tune of $25.7 million from Accel Partners, Lightspeed Venture Partners and Cambrian ventures (a small fund that the founders ran), along with private investors including Jeff Bezos of Amazon.com who provided the seed funding of $700k and Bill Miller of Legg Mason Funds. In December 2007, DAG Ventures joined the previous investors to invest an additional $10 million.

Given its tough competition from search engines like MedStory and Healthline for Health or Kayak and TripAdvisor for travel, its key challenge would to be to differentiate itself to consumers via the user experience, and to advertisers via audience segmentation.

Their flagship site Righthealth.com is one of the top 6 health sites as per Hitwise and has a Quantcast ranking of 181 with 6.9 million unique visitors per month in the US.

I like Kosmix and would like to see the company build itself, rather than sell out to any of the bigger guys in the short run.

The main source of revenue for the company so far is Google AdSense. The site has a very targeted and high value ad inventory, which in the future, they ought to build vertical ad networks around. In fact, a combination of Kosmix and Adify (Interview with CEO Russ Fradin here), coupled with a strong ad sales force looks to me like a potential Google challenger. They should consider this merger in 2008.

This segment is a part in the series : Deal Radar 2008