Tuesday, May 27, 2008

Whrrl Raises Big Money

Some exciting news for the LBS industry today. Pelago, parent company of Whrrl, raised $15M in a Series B round from some heavy hitters including T-Mobile. When I first read the story I thought 2 things:

1) Great to see geo-related, "where 2.0" companies raising serious cash. The phrase, a rising tide lifts all ships, comes to mind.

2) What are they going to do with all that money? This is $15M on top of the $7.4M already raised.

According to the press release and blog posts, the money will be used to quickly grow into new markets in the US and abroad. This is a smart team (ex Amazon veterans) backed by smart money (Kleiner Perkins, Jeff Bezos), but $22M+ seems like a lot of money for what is now a service built on top of Google Maps. It is an interesting service with some nice twists on LBS, but not one that on the surface seems to need that sort of cash to expand.

My guess, and this is not based on anything but pure speculation on my part, is that Pelago/Whrrl will be building out their own location based advertising platform which will require time, resources and therefore cash.

Geotargeted ads are the holy grail (or Crystal Skull) for location based services. A lot of people are focused on the building of services (Brightkite and Loopt come to mind), but fewer are focused on the advertising portion. The idea that a relevant ad can be delivered to me on my phone in a non-obtrusive manner has yet to be mastered.

Whrrl can combine both your past actions (place's you've been, reviews you wrote) plus your current location to deliver targeted ads. This is demographic/ psychographic/ geographic/ "fill in the blank" graphic, gold for advertisers.

Perhaps Whrrl will become the AdSense for location based services. (Blogger Greg Sterling has written some excellent posts related to this topic.) If not, I would like to know what they plan to do with all that cash.

(Note: I do not know what kind of relationship they have with carriers and how much having access to those companies might cost.)

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