Funding news in adtech—where have you been?
Yesterday, HUMAN announced it has raised $50 million from WestCap, with additional backing from Goldman Sachs, ClearSky, NightDragon, and Vertex Ventures US. According to the company’s announcement press release, the funds will be used to integrate “advanced AI” into HUMAN’s cybersecurity platform. HUMAN’s tech helps companies protect digital ads, web and mobile apps, and online accounts from fraud, abuse, and security threats. The company also said the funding would help them expand into the public sector for government contracts.
Additionally, Scope3 announced new funding for a nice one-two-punch on the week. Brian O’Kelley’s company, which focuses on decarbonizing media and advertising, raised $25 million in a new round led by existing investor GV, with participation from Venrock, Room40 Ventures, Craft Ventures, Aperiam Ventures and Virgo Strategic Investments. According to the release, the funding will allow Scope3 to extend its work beyond the digital advertising ecosystem to address the growing climate impact of the AI industry.
Why This Matters:
A recent report by Crunchbase revealed a pretty significant drop in funding for U.S. adtech startups. Only $360 million has been invested so far this year, per the report, marking the slowest pace in over a decade. The downturn is part of a broader trend, with investment and deal volume in the adtech sector steadily falling since 2015.
Crunchbase points to three primary factors for the decline:
- Market Saturation: The adtech market has become increasingly crowded, making it harder for new startups to gain traction.
- Economic Uncertainties: Broader economic concerns, such as inflation and recession fears, have made investors more cautious.
- Regulatory Pressure: Strict privacy regulations, like the EU’s GDPR and California’s CCPA, have increased compliance costs and operational complexity for adtech companies, making them less attractive to investors.
The recent funding rounds for HUMAN and Scope3 are encouraging signs for the industry, however, especially given the overall slowdown in investment across the space. It’s good to see.
Experts React:
“From ad fraud and account takeover to account fraud and compliance, HUMAN has proven their platform can defend against most prolific threats on the internet today,” said Kevin Marcus, a Partner, co-COO, and Head of Strategic Operators at WestCap, a HUMAN investor.
“AI and the media industry are soon going to be indistinguishable,” said Brian O’Kelley, co-founder and CEO of Scope3. “The biggest AI players are monetizing through advertising, just like the search giants before them, and every marketer is using AI to create the content that fuels their campaigns. That’s why extending our methodology to capture the climate impact of AI is imperative, both for our business and the industry as a whole.”
Our Take:
While the funding rounds are significant, it’s noteworthy that both companies are discussing plans to expand beyond the advertising and media industries.
HUMAN has been working on this for several years, building a broader cybersecurity business. The mention of public sector growth simply underscores their ambitions to move beyond their initial market.
Similarly, Scope3’s latest raise highlights the opportunities it sees in the AI space, where carbon emissions are a major concern. (Consider that a single ChatGPT prompt uses about as much energy as having a light bulb on for 20 minutes.)
