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Vungle Creates $1M Fund To Lure Top Mobile Developers To Its New App Promotion Platform

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Vungle is all about taking a unique and aggressive approach to promotion. That’s because the startup is on a mission to give mobile developers a better way to promote their apps — and an alternative to banner ads — by helping them create short, HD video trailers that can be shown across other apps in its network. But alternative advertising isn’t just for their customers, Vungle’s co-founders have employed it themselves.

After reading TechCrunch’s post about AngelPad, Co-founders Zain Jaffer and Jack Smith bought targeted search and Facebook ads to reach the accelerator’s founder Thomas Korte and his friends. The ads said they had an urgent message for the founder and included a link to their pitch for Vungle. And it worked … they got in.

At AngelPad, the co-founders went on to use their unique (or spammy) promotional techniques on investors. That, too, worked out. Last month, Vungle closed a big $2 million seed round from notable VC firms like Google Ventures, AOL Ventures (Disclosure: TechCrunch is owned by AOL), Crosslink Capital, SV Angel, 500 Startups, SoftTech VC, and several angels, including Maynard Webb, Scott McNealy and Tim Draper.

And now startup is at it again, announcing today that it will be using its seed funding to launch a $1 million fund to entice developers to use its platform and its alternative mobile advertising.

The co-founders told us that, since launching their closed beta last month, they’ve seen a lot of interest from advertisers, specifically, app developers like NgMoco, Pocket Gems and XMG. Thanks to this demand, they’ve decided to make its “publisher SDK” self-serve so that any app developer can now show video trailers for their apps and games.

Jaffer and Smith believe sincerely that they’ve created “an entirely new ad unit for mobile,” but in order to compete with well-established monetization options like banner advertisements, they have to sign up as many publishers as fast as possible.

So their logic goes: What better way to incentivize developers to join their platform than by dedicating half of their funding to the cause? With its new fund established, Vungle will work with selected developers to guarantee payouts ahead of time should they meet certain objectives — like showing a target number of app trailers, for example.

The co-founders also said that, in order to assuage developers’ common concern that there won’t be enough ads available to show even if they agree to the terms, they want to offer publishers a “100 percent fill rate” guarantee.

Though they do seem realistic enough to admit that, as a new form of ad-unit (and ad network) — and a young company that’s been in closed beta — they won’t be able to offer every publisher that 100-percent fill rate guarantee.

So, while they’re building their inventory, their fund will allow them to guarantee developers payment, regardless of whether or not they meet their ambitious fill rate goal.

The co-founders are still deciding on pricing for video trailer creation, but, whether or not their approach to promotion is right for your startup, you have to give Vungle credit for being willing to throw themselves into the fire. The interest from investors has certainly been real, and if developers give them anywhere near the same credence (and early signs show they’re at least willing to test the waters), then Vungle just may be onto something.

Of course, walking the walk can be another beast entirely.

Find Vungle here.