Virool raises $12M for native video ads

Video ad startup Virool has raised $12 million in Series A funding.

The company works with publishers including Mashable, Adweek and The Onion. It offers what it calls an Inline video ad unit, which has already been served across more than 2,000 online properties and which creates new ad inventory by launching video ads in the middle of articles and other editorial content.

Does that sound kind of annoying? Well, CEO Alex Debelov said it’s designed to be “very non-intrusive” — it doesn’t play sound unless you hover your mouse over the ad (or, on mobile, when you actually stop scrolling). Some publishers go further, by only turning the sound on if you actually hit a button.

More broadly, Debelov said the company’s mission is to “make advertising human.” He argued that because these kinds of native units offer opportunities for viewers to engage with and share the ads, they incentivize marketers to create more engaging videos.

In addition, Virool has developed technology that it calls eIQ, using webcams to help advertisers understand viewers’ emotional response to their videos.

Virool was incubated at Y Combinator and raised a $6.6 million seed round in 2013. The Series A comes from Menlo Ventures, Yahoo Japan, Flint Capital and 500 Startups.

It doesn’t seem like a great time for ad-tech startups to be raising money, but 500 Startups Founding Partner Dave McClure told me, “Video is growing by leaps and bounds, and that’s not slowing anytime soon. There might be skepticism about ad tech, but not skepticism about video.”

Debelov also said there’s a difference between struggling ad-tech companies that focused on “arbitrage and things that are outdated,” versus companies like Virool that are “doing something new and growing fast.”

Next up: More mobile ad units and geographic expansion, including (as the Yahoo Japan investment suggests) efforts in Japan.