The funding is the first external investment that PocketMath has taken, having bootstrapped itself to 40 staff over the four years since being founded by three University of Texas alumni.
The company is a pure self-service mobile demand side ad platform, which anyone can use to place ads using a real-time bidding (RTB) system that targets audiences on mobile devices. In layman’s terms, RTB is an auction-based system that lets advertisers with the winning (top) bid serve ads to consumers across a range of websites and mobile apps — it’s a way to instantly reach audiences based on factors like demographics, device type, time of day and location.
PocketMath claims to process more than 20 billion ad impressions each day, and it supports a range of ad networks, including Twitter-owned MoPub, Opera Mediaworks, and InMobi. Interestingly, the company began as an ad-supported facial recognition service, but after co-founder Casey Grooms stumbled on the growing mobile ad tech space, it spent two years talking to potential ad partners and building (and re-building) a mobile ad platform.
Grooms told TechCrunch that the company rebranded to PocketMath in mid-2012, but it didn’t actually open for business until early 2013. Up to that point, it had relied on being a small team and spending carefully — co-founder JD Lee provided the capital until the team felt its product was ready to go to market.
“In the first three months we were seeing $1,000-$2,000 in spend on our platform, now, over eighteen months later, it’s at nearly $1 million,” Grooms said.
The company was bootstrapped on a budget, with Grooms himself handling all sales and marketing. He spent his time “hustling,” traveling to as many ad industry events as possible and doing anything he could to get in. That included accidentally approaching AppNexus CEO and founder Brian O’Kelly for his name badge to get into an AppNexus party. Needless to say American Grooms was unsuccessful that time.
Unlike other ad platforms, PocketMath doesn’t have a minimum spend or commit and it is self-service. That, Grooms said, means it used by all sorts of customers — right from individual, to large corporates and even ad networks themselves. Grooms said that generally 20 percent of its 1,000 paying customers account for 80 percent of the revenue, but the company is focused on raising visibility of its name and reputation worldwide having done no formal marketing up until this point.
The company could be close to break-even if it were to stop hiring and investing in growth, Grooms said, but he believes that taking money from Rakuten Ventures allows the startup to super-charge its development not to mention validate its business.
Hiring Spree And Rakuten Partnerships
The deal takes up a large chunk of Rakuten Ventures’ new $100 million fund, and it sees Managing Partner Saemin Ahn take a seat on the PocketMath board. It is also a sizable Series A round for a company based in Singapore/Southeast Asia, but — as a global company — PocketMath isn’t constrained by its location.
Grooms said the money will be spent on developing new technology and hiring sales and marketing staff. PocketMath plans to double its headcount, that means primarily hiring in its Singapore (head office) and San Francisco locations, as well as opening up sales presences in Washington DC, Berlin, Paris, London, Tel Aviv and other markets.
“China will also be heavy growth market — we feel it’s ripe for the taking,” Grooms added.
Tying up with Rakuten does of course bring with it potential business synergies.
Grooms explained that the Japanese company may look to whitelabel PocketMath’s platform in Japan, while the PocketMath team is working on “detailed technical requirements” that will enable it to be used on its flagship Rakuten.com site.
Rakuten Ventures isn’t known for being a prolific investment firm, instead it tends to chose deals carefully and pick startups that add value to the Rakuten mothership. In the case of PocketMath, Grooms admitted that there may be potential for a full-on acquisition in the future, but he said that possibility had no been discussed.
“At this point, we want to grow our business and become the de facto platform the world is using for mobile ads,” he explained.
Certainly, the fact that Rakuten is providing the entire round itself would suggest that this could be a first step towards a closer relationship between the two. But then again, nothing is for certain. The Japanese company once invested in Pinterest, but never revisited the table for further rounds and it even developed its own Pinterest clone in Japan.