1Mby1M Deal Radar 2010: BrightEdge, San Mateo, Californi

BrightEdge is a search engine optimization (SEO) platform and a developer of on-demand software that aims to help companies grow revenue from organic searches in a measurable and predictable way. BrightEdge released its platform earlier this summer after three years in stealth mode.

The San Mateo, California–based company was founded by Jim Yu and Lemuel Park in 2007. Yu became interested in SEO while at Salesforce.com, where he lead a core part of the AppExchange and Force.com group. When he started promoting AppExchange, Yu was struck by how he could get all the reports he wanted on how much paid per click (PPC) search cost and generated, but nobody could tell him the same for organic search even though it was clear that organic search was generating much more qualified leads.

The company started on Yu’s kitchen table, where he and Park would meet potential investors above a pile of servers that were crawling the Internet at full capacity 24/7. Based on the original product developed from this massive crawl, the pair raised their first round from Altos Ventures and attracted engineers with deep Search and SaaS experience at Salesforce, Google, and Digg.

For companies that place a high priority on improving traffic or sales through organic search, BrightEdge aims to enable marketers to manage SEO based on ROI and make SEO as easy to manage as PPC. The aim is to transform the SEO process, which today is laborious, manual, and not well structured, and make it measurable, scalable, and predictable. Managing and, more fundamentally, improving, SEO is a formidable task – according to iProspect, “AdSense ads on Google pages attract only 28 percent of users’ total clicks, while the other 72 percent go to organic results.” What’s more, as Wade Roush of Xconomy notes, SEO is a “messy art with many complex variables,” and Web merchants and publishers may be skeptical of the effectiveness of SEO in truly bringing in more traffic.

The product comprises several elements, including closed-loop analytics to track SEO-driven changes, a “competitive keyword map” that tracks search rankings for BrightEdge customers and those customers’ competitors, and an SEO management system to help various departments work together on SEO more easily. Products are delivered as on-demand software through a SaaS subscription model.

Forrester estimates the market’s value at over $2.4 billion in the United States in 2009, growing to over $5 billion by 2014. SEO is a fragmented market serviced by hundreds of point solutions, marketing agencies, and independent consultants. BrightEdge claims to be the only solution that is enterprise-class and that provides a central place for SEO coordination and automation across a company, but is is not without competitors, notably Enquisite, which I covered in Deal Radar and in an interview with CEO Mark Hoffman. Another competitor is Conductor, but this company does not do SEO optimization.

E-commerce and retail are two important target segments. For companies in these segments, the value of online marketing programs is linked to online purchases and can be easily justified. The company worked closely in stealth mode for over three years with selected customers to understand their needs and perfect its technology platform. BrightEdge has been actively selling since the beginning of 2010. The positive word of mouth from early customers also helped tremendously in growing the customer base. There are about forty customers, including MySpace, VMware, Symantec, SolarWinds, Trulia, and Branders.

The company has raised a total of $8.5 million thus far: a $2 million Series A from Altos Ventures and Illuminate Ventures in 2008; and a $6.5 million Series B led by Battery Ventures with Altos Ventures and Illuminate Ventures in 2010. At present, there are no plans to raise more money. Revenues range from $1 million to $5 million.

There is no specific exit plan. The company’s first priorities are to grow the customer base and strengthen its value proposition through new technology development and strategic partners. It believes that if it focuses on customer success, the rest takes care of itself.

Recommended Reading
5 Tips for Kick-Starting Your SEO (by Jim Yu)
Deal Radar 2009: Clearpath
Conductor Aims To Conduct Culture Of SEO Throughout Your Organization Via Searchlight
Deal Radar 2009: Enquisite

This segment is a part in the series : 1Mby1M Deal Radar 2010