NewsCred gets $25M to expand its growing media tech empire

Media and ad people unfamiliar with NewsCred should start paying attention. The New York start-up delivers articles from the likes of the New York Times and the Economist to publishers and Fortune 500 clients, and also runs a sophisticated advertising operation with the help of hundreds of freelance journalists. And it’s growing fast.

NewsCred, which was founded in 2008, on Tuesday announced a new $25 million funding round that will help the company build up its global sales force and technology base, and expand its content and marketing offerings to more languages. The new investment will also help NewsCred take advantage of the current mania for so-called native advertising.

To key to NewsCred’s success so far has been its access to two things that most other companies don’t have: 1) a giant library of news, videos and images created by famous publishers; 2) a technology platform that can deliver such content as a curated stream to any website — be it to a traditional media site or to a brand site like Pepsi. The company also connects big brands with a network of journalists to help the brands develop original content for their marketing campaigns.

NewsCred makes money by supplying content to its clients, and shares that revenue with its publisher partners, which also include Reuters, Bloomberg and the Huffington Post.  In a phone interview, CEO Shafqat Islam told me that NewsCred has had no trouble renewing all of its content licensing deals — suggesting that publishers continue to regard it as a middleman, not a competitive threat.

Where NewsCred could prove a threat, however, is in the crowded field of native advertising. This much-hyped idea, popularized by BuzzFeed, is based on delivering ads that mimic the surrounding content on a webpage — meaning a reader will be more likely to pay attention to them.

Since NewsCred’s platform is based on delivering customized content, it’s no stretch for the company to use that same technology to deliver native advertising at scale. While the idea of large-scale native advertising is perhaps an oxymoron (how can it be “native” if its everywhere?), a company called Sharethrough, which just raised $17 million, claims to have figured it out on the video side of things. Meanwhile, NewsCred is also preparing to be a partner (or perhaps a competitor) to sites like Taboola and Outbrain, which are responsible for those “elsewhere on the web” stories you see everywhere these days.

All of this raises the question of how to categorize NewsCred: is it still a digital newswire as my colleague Mathew Ingram described it in 2011? Or is it a marketing and advertising company? Or, as Islam described it in our phone conversation, is NewsCred a SaaS (software-as-a-service) technology outfit?

The answer, right now, is that it’s all of those things – which is the main reason the media industry should pay attention to NewsCred. Another reason is its growth; the company says it tripled its customer base last year while increasing revenue by 400 percent, though it’s not making a profit at this time. According to Islam, there are no preparations to move towards an IPO, in part because he wants to keep building NewsCred as an independent company.

This funding round was led by InterWest Partners with participation from existing investors and comes after the company raised $15 million last March.