Sovrn Raises $25 Million To Diversify Beyond Ad Tech

Sovrn closed a $25 million Series E round Thursday to help it acquire companies outside of ad tech. Sovrn’s original investors, led by Foundry Group, all participated in the round.

“Our business is 100% focused on tools and technologies that help publishers – of which advertising is an important one,” said Sovrn CEO Walter Knapp.

He plans to acquire one or two companies – and at least one this year – to bolster the types of tools and technologies it can offer its mid-tail publishers.

Instead of focusing on programmatic monetization like AppNexus and Rubicon Project, Sovrn hopes to build more durable subscription-based business relationships with publishers, like those offered by Wix, GoDaddy, Microsoft and Adobe.

“Advertising is already becoming a decreasing part of our business. And that’s intentional,” Knapp said. Less than 60% of Sovrn’s business comes from its exchange, a percentage he expects to continue to decrease.

Sovrn is building and acquiring into five different categories of publisher tools: content creation, content distribution, monetization in all forms, operations and capital.

Besides its ad exchange, Sovrn offers publishers consulting services and outsourced ad ops. It helps publishers distribute content across social media and Apple News and in formats such as AMP and Facebook Instant Articles.

Sovrn also has a fast-growing business loaning money to publishers who need funds because 60- and 90-day payment cycles are too slow.

Knapp is also interested in helping as publishers look to fund content through reader payments and product sales.

Sovrn’s publisher stack

Sovrn plans to use its payment infrastructure and data to tie together its current offerings and prospective acquisitions.

The payment infrastructure lets it account for publisher payments so all parties can monitor revenue, and Sovrn’s data collective lets publishers both monitor their own revenue and benchmark against competitors.

Sovrn’s new publisher tools, once they’re acquired, will plug into that payment and data infrastructure.

Besides Foundry Group, Archer, Lexington and Oak contributed to the funding round. No one took money out.

As Sovrn’s investors put in $25 million to help it diversify outside of ad tech, what kind of outcome could they generate on their investment?

“We’ve had spirited discussions about that,” Knapp said. But he prefers to focus on growing his business, not parading it for sale.

“As the CEO, I’m in the business of building a big, bad-ass, durable company that’s growing and profitable,” Knapp said. “There will be plenty of people interested in that asset.”

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