Shalom Life | June 04, 2014

Israel's Outbrain to go Public with Billion Dollar IPO

The company will likely seek $250 million on the NASDAQ

By: Graham Sigurdson

Published: September 9th, 2013 in Business » Israel

Israeli-based start-up Outbrain has announced its plans to go public with a valuation of a billion dollars today.

Calcalist, an Israeli business daily publication, reports that Outbrain will seek $250 million on the NASDAQ. The buyout of two other Israeli tech companies - the mapping app Waze by Google for a billion, and the security firm Trusteer by IBM - seems to be the impetus for this plan and exit strategy.

Should the plan be successful, Outbrain’s deal will result in the third-largest IPO for a company in Israel. In 1999, the cellphone provider Partner raised $600 million on a NASDAQ IPO valued at $2.3 billion, while in 2007, Cellcom, a different provider, entered the New York Stock exchange with a value of $1.95 billion, raising $400 million in the process.

Outbrain did not set a date for the IPO, but it will likely take place in the first half of 2014. The company, which currently houses 200 employees in 15 worldwide offices, 70 of which found in their Israel R&D office, has been searching for banks and/or investment houses to deal with the IPO.

Outbrain appears on many content websites, providing links to older content that is sometimes very difficult to locate. By doing so, Outbrain finds content that may have been ‘buried’ on a site, and allows for an overall richer experiences by using cookies to determine a user’s interest, and through providing suitable links. When the user clicks on a promoted link, the site that hosted the link is paid for the referral, of which Outbrain takes a cut. CNN, The New York Times, The Wall Street Journal, and some 100,000 other sites have, and continue to, use Outbrain.

Established in 2007, Outbrain has made $64 million in four rounds, bringing in close to $35 million in investments in December 2011. At that time, the company was valued at $500 million, with primary investors being Carmel Ventures, Sigma Investments, Glenrock, Gemini, and the Lightspeed Venture Partners, as well as investments by serial angel investor Zohar Gilon.

In mid-August Outbrain was compromised when Syrian hackers hacked into the website, enabling them to redirect traffic from news websites. The ‘weak link’ in the system was generated when an employee clicked on a malicious link, which allowed for the hackers to install a virus in the Outbrain system. As a result, the entire network had to be taken down while the compromised software was located.

According to Yaron Galai, Outbrain’s CEO, the content Outbrain supplies has more click-through rates that are "orders of magnitude higher than most traditional forms of digital advertising. Audiences who discover content through Outbrain are also more engaged — they consume 44% more page views per session than those coming from search and 46% more than social media."

Hopefully we’ll have even more good news to read when the company goes public in 2014.

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